Checkfree

www.checkfree.com

Checkfree’s added a welcome new element to the usual electronic bill payment features and benefits: tracking.

Three key benefits are touted on its demo:

•  Pay everyone you pay now
•  Get bills that do more
•  Find out who got paid and when

Checkfree (Atlanta, GA) has been talking to analysts and investors in general terms about a new person-to-person product line launching next year. CTO Ravi Ganesan briefed us on the effort, which he said is conservatively slated for a mid-Q2 2000 launch (could be earlier). It will leverage Checkfree’s dominant position in payment processing, problem resolution, and customer care.

Checkfree will launch the service in phases with the basic payment engine put in place in second quarter 2000. Enhancements will rapidly be added including escrow services, gift check programs, services for larger merchants, credit card charge options, and so on.

Approach: Checkfree will try a new twist on electronic billing and payments: Appealing to small business recipients of funds, not the senders. Rationale: Small businesses and individuals will willingly go through the hassle of registering for a new payment service if it will help speed up the transfer of money INTO their accounts.
 

Checkfree made this discovery during focus groups assembled to figure out why small businesses, with much more to gain through electronic bill payment, lagged consumers in adoption; and why small business managers, who claim they will use electronic bill pay, often fail to follow through.

Checkfree’s hypothesis: Small businesses see electronic bill pay benefiting the other party in the transaction. Checkfree believes that if they can get small businesses signed up to electronically receive funds, the businesses will also start sending money the same way. It’s innovative thinking, and a sign that Checkfree may maintain its payment industry leadership.

How it Works:

1. Any user, consumer or business, that wishes to receive money electronically registers in a Checkfree-enabled community (Yahoo!, bank, credit union, start-up) to receive payment through a new service temporarily dubbed MoneyWeb. The size of the transaction will be capped to reduce fraud and money laundering exposure.

2. Once registered, the user can slap a unique identifier on their paper billing statements, email messages, Web site, etc.

3. Anyone wishing to electronically send money to a MoneyWeb user simply enters the recipient’s MoneyWeb identifier and the amount to be paid on a MoneyWeb-enabled site.

4. The funds are debited from the payor’s designated bank account that evening via ACH (electronic transfer) and put into a Checkfree holding account.

5. After Checkfree is assured the debit has cleared, funds are then credited to the recipient’s bank account. Total time elapsed will be two to three days. Checkfree has the option of decreasing that time as they become familiar with a participant’s buying behavior. Funds are “good” to the extent the law allows. Payors can still disallow the transaction later if they claim they were defrauded by the recipient of the funds.

6. Emails will be exchanged along the way alerting recipients that money has been sent to them.

Bank Advantages:

•  Direct transfers: A huge advantage of this program compared to Confinity’s, is that registered users don’t have to do anything to receive money. Funds are automatically deposited to their registered bank account via the standard ACH mechanisms. This makes it easier to use, but reduces float income for the sender’s bank.
•  Experience and reputation: Checkfree processes 14 million transactions per month. In the time it took you to read this issue, they have handled more transactions than Confinity has in its entire operating history. As Checkfree CTO Ganesan said, “It’s easy debiting and crediting accounts via ACH when (the transaction) goes well; the hard part is handling the transactions that go bad.” From customer service to tech support, Checkfree has an advantage in handling the messy service side of the payments business.
•  Security and audit compliance: Checkfree’s systems are watched, audited, checked, and rechecked by most major banks, technology consultants, and government regulators. The likelihood of a hacker or embezzler seriously penetrating Checkfree’s armor, is remote. It’s harder to say the same about a start-up.

Contact:

Ravi Ganesan, CTO

4411 East Jones Bridge Road

Norcross, Georgia 30092

Phone: 678-375-3000 Ravi_Ganesan@atl.checkfree.com

Referral Tracking: One more example of Confinity’s savvy. The company make is easy to track whom you’ve sent money to and whether the person has taken the steps to qualify for a $10 referral fee. It’s smart business, PayPal gives users the tools to not only make referrals but to follow-up with their friends to make sure they use the system.