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CheckFree still owns bill presentment
By Penelope Patsuris
NEW YORK. 04:35 PM EDT-Late yesterday Chase Manhattan (nyse: CMB), First Union (nyse: FTU) and Wells Fargo (nyse: WFC) announced their intent to team up and create bill presentment technology, despite the fact they're already using the arena's leading technology, CheckFree (nasdaq: CKFR). Indeed, hundreds of U.S. banks are working with CheckFree, and that's just the problem as far as banks are concerned. The banks' joint press release states an intention to set a technological standard for online bill presentment, but in fact CheckFree is already well on its way to claiming this territory for itself.
Nevertheless, the market reacted strongly yesterday, sending CheckFree shares down 6.75 points to close at $28.75. This morning the company withdrew a 3.8 million share follow-on stock offering that had been priced after Monday's market close at $39. This afternoon they closed down again at $28.13.
Money center banks must be relieved. None of this changes the reality of how far ahead them CheckFree is, but it does represent a symbolic triumph. CheckFree has signed 50 billers and some of them--like BellSouth (nyse: BLS), MCI WorldCom (nyse: nyse:WCOM), GTE (nyse: GTE) and AT&T (nyse: T)--are pretty big, representing millions of accounts. CheckFree's technology prepares and presents their bills on aggregating sites, like that of First Union and Chase. That's problem one for the banks, who don't want CheckFree to become the Microsoft of bill presentment, holding the banks hostage to its technology. Banks also worry that their brands, and therefore their access to the consumers they want to sell services to, will be obliterated.
But by far that's not that banks' biggest problem. The fact that CheckFree recently signed a deal with Yahoo! (nasdaq: YHOO) for that portal to aggregate bills illustrates what banks are truly afraid of. If consumers start going to places like AOL (nyse: AOL) or Schwab (nyse: SCH) to pay bills (the likely aggregators), they're likely to move their checking accounts as a result. After all, that's the main reason people have checking accounts, so if they're paying bills at Schwab why not use the checking services they offer? AOL and other high traffic sites aren't going to open banks, but they will probably cut sweet deals with banks to offer low-cost checking to users who pay their bills there.
Banks won't become obsolete, but a lot of them will close.
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