Electronic presentment and payment

Work Process Improvement Today, Jun 1998 by McNair, Stephen

The remittance processing seems to be in a constant state of change. The greatest amount of change is occurring in electronic bill presentment and payment. Electronic bill payment traffic increased 138%, to 270 million transactions, from 1996 to 1997, according to preliminary findings of a Coopers & Lybrand LLP study. The study-which counts payments originated through personal financial management software, Web sites, and phone based billing services-estimated that 1997 transactions were worth $65 billion, up 129% from the prior year. This article will provide a brief overview of the processors in this market segment.

CHECKFREE

CheckFree is the dominant player in the electronic bill payment market. More than 283 major financial institutions, including 9 of the 10 largest banks, have selected CheckFree for the electronic banking. In the last 12 months CheckFree's subscriber base has grown 250%. According to Online Banking Report in 1996 CheckFree owned 55% of the electronic bill payment market with 7 million transactions per month. With the purchase of Intuit Services Corp., producers of the popular accounting packages Quicken and QuickBooks, CheckFree's monthly volume increased to over 9 million transactions per month. Its market share rose to an estimated 71%.

CheckFree's initial focus has been on the consumer. Using a PC based accounting or money management package CheckFree-paid subscribers can pay their bills from their PC. While CheckFree subscribers initiate their bill payment electronically it is estimated that up to 60% of CheckFree's transactions with merchants are still with paper checks.

CheckFree serves as the remittance processor for Barnett's home banking customers who use Intuit's Quicken, QuickBooks and Barnett's BankNOW software. CheckFree will also allow Barnett customers to access accounts through Microsoft Money software and use touch-tone phones to pay bills.

CheckFree has been focused on generating sizable payment volumes with a focus on the consumer. However, a recent introduction by CheckFree is directed at the financial institution. The product is called CheckFree E-Bill, an electronic bill delivery and payment solution. E-Bill is added into a financial institution's home banking program without any modification to the existing banking operations. CheckFree Corporation and International Billing Services (IBS) formed a strategic alliance to deliver E-Bill, an electronic bill presentation and payment service. E-Bill is being offered to customers of IBS' statement processing services. IBS provides statement-processing services to companies in the telecommunications, utilities, financial services, and other industries.

Chase Manhattan Bank is scheduled to be the first bank to offer electronic bill presentment from CheckFree. The service is scheduled to go live in the first quarter of 1998. It will integrate CheckFree's Internet bill presentment functionality, via its E-Bill Web site, with Chase's commercial cash management products and consumer on-line banking services. CoreStates Bank, using E-Bill, plans to offer nearly 150 of its largest corporate customers the option of converting from paper to electronic remittance for electronically initiated bill payments.

CheckFree is located on the Internet at www.checkfree.com.

INTEGRION

Integrion is a for-profit partnership jointly owned by 18 banks and IBM. Since its formation in September 1996, Integrion has increased its market share through acquisitions and partnering. Originally formed by 15 banks and IBM, Integrion acquired Visa Interactive last year and is due to finalize a 10-year partnership with CheckFree. With its eighteen bank partners, Integrion has access to 60% of the country's DDA (demand deposit accounts).

The Integrion banks will be using the Interactive Financial Services system to offer account balances, transfers, and bill payments via the Internet and through Intuit Inc.'s Quicken 98 personal financial software. CheckFree will adopt Integrion's Interactive Financial Services that was developed by IBM.

TRAVELERS EXPRESS

Travelers is the second largest electronic bill payment processor. It is estimated Travelers processes 2.2 million electronic payment transactions per month. Travelers handles bill payments for banks working with Arksys, formerly Arkansas Systems Inc.

Travelers is best known for its paper checks that are distributed through a network of 4,500 financial institutions that use its official checks and share drafts, 16,000 agents that receive inperson utility and other bill payments, and 45,000 retail outlets and convenience stores that sell money orders.

Travelers electronic bill payment program is named Moneyline Express. Since the October 1995 acquisition of PayMate Inc., the company has signed 522 mostly small financial institutions to offer its service through technology intermediaries, including M&I Data Services, NCR, Destiny Software, Digital Insight, and Goldleaf Technology.

MSFDC

Formed in June of 1997, MSFDC is a joint venture of two very large organizations-Microsoft in software and First Data Corporation in payment systems. The electronic bill-pay service will be offered and branded by banks as part of their on-line banking programs. MSFDC will present bills over the Internet. A consumer, using Microsoft software, will be able to call up his/her bank's Web site, go to the bill pay section, select the bill to pay, review the bill in detail, enter or OK the amount to be paid, and have the transaction automatically update his/her bank account ledger. The system will provide access at any hour of any day.