Source: CheckFree, 9/02 except EPP rev. est. by *Financial DNA 2/02 EPP = electronic payments and presentment

Atlanta-based CheckFree is the dominant third-party electronic bill-payment processor, controlling an estimated 2/3 of the market . Founded in 1981 by its current CEO, Pete Kight, CheckFree has grown to 3,000 employees and $493 million in revenues (FY02), up 14% from the previous year. Pro forma net income was $17 million in FY02, compared to a pro forma loss of $15 million in FY01. CheckFree offers a wide variety of electronic bill payment and ACH processing services for consumers and small businesses. Its clients include 9 of the top 10 consumer banks along with major consumer financial services players such as Yahoo , MS Money, and Quicken.

Number of Customers

Currently, 6.6 million consumers are signed up to pay bills online through CheckFree clients; however, only about 5 million are considered active, having paid a bill during the past 90 days (see Table 1). The vast majority of users come to the company indirectly through partners. However, the company does maintain a lightly promoted consumer-direct business featuring “Scout the bill retriever.”

Total payment volume last quarter (May/June/July 2002) was 88 million, or 29 million transactions per month. Annualized, its current volume is running at 350 million transactions per year, more than 2% of the 15 billion bills paid in the U.S. each year.

The company is also the leading third-party bill consolidator with total bill presentment volume of 1.3 million per month, representing an annual run rate of more than 15 million bills, about 0.1% of the total U.S. bills dropped in the mail each year.

Table 1

CheckFree Transaction Volumes, FY 2002

Source:  CheckFree 9/02

1.   Volume = average monthly transactions in April, May, and June 2002; Subscriber and biller totals are as of 6/30/02, CheckFree’s fiscal 2002 year-end.

2.   Active subscribers have paid a bill within the past 90 days

3.   Number of financial institutions and other clients who have enabled both bill viewing (presentment) and bill paying.

4.   Primary billers deliver at least 100,000 bills per month