Benny, so glad I can be of some help, Haven't read it yet, but here she be:
ONLINE BANKING TO OFFER RETAIL, WHOLESALE OPTIONS/ PAYMENT PROCESSORS, VANS DISCUSS CONNECTION
March 5, 1998
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CORPORATE EFT REPORT via NewsEdge Corporation -- The emerging Internet-based "home" banking networks will make it possible for businesses, as well as consumers, to receive billing statements and send payments electronically.
"We are anticipating it will be a great platform for business- to-business [electronic commerce]," says Bryce Hausmann, vice president for business development at Denver-based MSFDC, a joint venture of Microsoft Corp. [MSFT] of Redmond, Wash., and First Data Corp. [FDC] of Hackensack, N.J.
MSFDC rival Integrion -- the Philadelphia-based banking network owned jointly by 18 financial institutions, International Business Machines Corp. [IBM] of Armonk, N.Y. and San Francisco-based Visa -- also is eyeing the business-to-business market.
"There's no reason Integrion couldn't offer electronic commerce services to corporations and we are absolutely going to offer those services to small business," says Emily Mendell, manager for planning and communications at Integrion. Integrion will introduce a small business product suite this year, she adds.
Columbus, Ohio-based CheckFree Corp. [CKFR], which will handle electronic payment processing and bill presentment for Integrion, already has a subscriber base of its own of 200,000, of which an estimated 5 percent to 10 percent are small businesses.
Connecting to Value-Added Networks
"We're the first people who have entered into this small business market. The other guys doing business payments, like [Columbus, Ohio-based] Sterling Commerce [SE] and Harbinger Corp. [HRBC] [of Atlanta], are clearly in the middle- to large-corporate market. Eventually, we would want to hook up with those guys," says Lynn Busing, CheckFree executive vice president. Talks to that end already are underway, he adds.
Providing a seamless data flow between value-added networks (VANs) and home banking service providers could help large firms push electronic data interchange (EDI) down to the smallest links in their supply chains. "The great thing and the tough thing about EDI is that it is so flexible there isn't really a common standard that works across lots of businesses," Hausmann says. Because of that, costly EDI implementations rarely get beyond the big business level.
Hausmann won't comment on whether MSFDC is talking to VANs about interconnectivity, but says, "we see an opportunity in big business to small business billing."
Keeping Formats Flexible
Business-to-business transactions that require nothing more than a billing amount, account number and payer identification are indistinguishable from the electronic consumer payments that service providers like CheckFree offer today. Going forward, the challenge will be to expand the billing and remittance formats to accept detailed invoicing and variable payments adjusted for such things as discounts, spoilage and returns.
"The basic infrastructure is the same and we certainly are keeping in mind some of the business-to-business needs, making sure the system is open enough to allow for enhancements when we want to develop that market," Hausmann says.
Although the roll-out this year of both the MSFDC and Integrion home banking systems will focus on retail electronic bill presentment and payment, CheckFree already is positioning itself to be ready with a more sophisticated application for business-to-business invoicing and payments.
CheckFree is developing electronic invoice presentment and related electronic payment capabilities to facilitate "a biller that sends a lot of bills to the business community, especially small business," Busing says. Although he won't name the biller, Busing says, "We hope to make an announcement in the next 30 to 45 days."
Expanding The EC Market
For MSFDC, Integrion and CheckFree, the small business market (which includes firms with up to $10 million in revenues) is almost as attractive as the consumer market. Consumers make an estimated 15 billion recurring bill payments annually -- for such things as utility bills and mortgage payments -- according to analyst Gary R. Craft, with BancAmerica Robertson Stephens [BAC] in San Francisco.
Craft puts the volume of business-to-business payments close behind at 12 billion. And 60 percent of that volume involves small business transactions, estimates CheckFree's Busing.
Shifting those transactions from paper to electronics offers a huge revenue opportunity for the networks and payment processors -- which charge on a per transaction basis -- and a savings opportunity for participating banks because as volume goes up, unit costs go down.
In order to harness as many transactions as possible, MSFDC and Integrion are attempting to eliminate technological barriers and user concerns. The two networks are merging their separate specifications, creating a unified standard for front- and back-end connections. And both MSFDC and Integrion will support access through browsers, voice response units and the leading personal finance applications including Quicken from San Mateo, Calif.-based Intuit Inc. [INTU] and Money 98 from Microsoft.
For now, however, the only small business accounting software able to initiate bill payments, or facilitate online banking, directly with either network is Intuit's QuickBooks.
CheckFree interfaces with both QuickBooks and Peachtree Software, a wholly owned subsidiary of Roseland, N.J.-based Automatic Data Processing Inc. [ADP], and is developing its own interface for other accounting packages.
MSFDC Vs. Integrion
MSFDC is sharing its revenues from electronic bill presentment with banks to encourage them to bring bill payers online. But MSFDC will allow bill payers and others to bypass banks, accessing online services directly through the MSFDC Web site. By contrast, Integrion exists only to facilitate its participating banks and offers no direct services to end users. "When we've gone to billers to talk about getting their bills delivered electronically, we wanted to offer them the broadest distribution possible, " Hausmann explains. Limiting access to participating banks, it was feared, would reduce the potential number of online bill payers which would discourage biller participation.
"Our preferred method of distribution is through a bank," Hausmann says. But "to solve the chicken and egg problem, we have to offer this direct site." Integrion's banks hope that by banding together they'll generate the bill payer traffic that will attract billers. Integrion will also be taking advantage of CheckFree's existing biller relationships.
The advantages to initiating payments through a bank's Web site (whether on the Integrion or MSFDC network), include access to account balances online and the ability to pay virtually anyone using an automated clearing house credit that assures the receiver of adequate funds.
Bypassing the bank limits the billers that can be paid electronically to those offering bill presentment at the MSFDC site. Payment is made by authorizing the biller to initiate an electronic debit, offering no guarantee of funds. (Lynn Busing, CheckFree, 770/248-4202; Gary Craft, BancAmerica Robertson, 415/248-4202; Bryce Hausmann, MSFDC, 425/936-4091; Emily Mendell, Integrion, 888/890- 8932.)
Consumer Market Lags Business-To-Business EC Growth
The market for business-to-business electronic commerce (EC) is poised to grow dramatically, while consumer acceptance of online banking, bill payment and investing remains a tough sell, say two new surveys.
EC sales could double in the next six months, led by the wholesale market, according to the Arlington, Va.-based Information Technology Association of America (ITAA). The ITAA, with sponsorship from New York-based Ernst & Young LLP, surveyed 57 leading EC software and services companies, receiving 23 responses.
Sixty-one percent of the respondents cite corporate cost-cutting as the driver motivating businesses to investment in EC software and services. And, 70 percent believe the market could double in the next six months.
By contrast, while the potential market for home-based financial services keeps growing there are few actual users, according Princeton, N.J.-based SRI Consulting. Almost 25 percent of all U.S. households are potential users of home banking and online investing services, however, only 7 percent of households report ever using online banking with only 3 percent ever using online investment services.
The findings are based on a two-year survey of income levels and technological awareness in some 4,000 U.S. households. (Bob Cohen, ITAA, 703/284-5333; Larry Cohen, SRI Consulting, 609/734-2048.)
[Copyright 1998, Phillips Publishing] |
