Electronic Billing Merger Should Benefit Billers, Banks

CheckFree to acquire TransPoint; analysts see consolidation of standards

CheckFree Holdings Corp.'s $1 billion bid last week to acquire its biggest rival, TransPoint, should make it easier for utilities, banks and other service providers to send and process their electronic bills by virtue of having one less standard to contend with.

According to an agreement signed last Tuesday, Atlanta-based First Data Corp., Microsoft Corp. and New York-based Citibank will sell TransPoint to CheckFree in exchange for 23% of CheckFree's stock. Norcross, Ga.-based CheckFree is the nation's largest electronic billing company, serving some 62 billers and 3 million consumers.

TransPoint, based in Redmond, Wash., is the second-largest electronic billing firm in the U.S., with only about half the number of CheckFree's clients. Customers of the two companies include AT&T Corp., MCI WorldCom Inc., GTE Corp. and Denver-based Qwest Communications International Inc.

Prior to the deal, billers "had to integrate each of the specifications" between CheckFree and TransPoint, said Jim Moran, co-founder and executive vice president of edocs Inc., a Natick, Mass.-based developer of billing software.

Converging Standards

In time, said Moran, those standards will converge and "make everyone's life a little easier on the back-office side."

However, consumers aren't likely to see any difference, he added. "Consumers are completely insulated from this," said Moran. "All of this standards information is way, way upstream — it has to do with how billers deliver their data to portals so consumers can come and retrieve it."

Still, the deal should eventually benefit both billers and consumers. For their part, billers will have a streamlined path to moving their paper online, provided the Department of Justice approves the plan, industry observers said.

The CheckFree/TransPoint deal "will enable the delivery of more bills over the Internet, faster and more efficiently," said Patrick J. Swanick, president and CEO of Cleveland-based Key Electronic Services.

As for consumers, said Swanick, the combination should simplify customer service "by allowing us to track billing and payment across a single infrastructure."

CheckFree CIO Steve Olsen said there shouldn't be any technological problems as a result of the merger. He said both companies store their data in similar relational databases, which should be straightforward to integrate.

"The parts that are dissimilar are in the ways we integrate directly with the biller," he said. However, CheckFree will continue to support TransPoint's front-end systems for the next three years.

After the merger, which still needs to be approved by shareholders and the Justice Department, CheckFree will not only inherit TransPoint's clients, but also gain access to First Data's Western Union network of more than 82,000 locations in 176 countries.

In addition, CheckFree will gain access to TransPoint partner Intuit Inc., the Mountain View, Calif.-based publisher of the popular Quicken personal finance software.

Copyright © 2000 IDG Communications, Inc.

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