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Technology Stocks : CheckFree Holdings Corp. (CKFR), the next Dell, Intel? -- Ignore unavailable to you. Want to Upgrade?

To: CAPT TONY who wrote (13883)	2/18/2000 9:14:00 AM
From: Rusty Johnson	Respond to of 20297

CheckFree Must Win Over Banks, Billers, Consumers By CARRICK MOLLENKAMP Staff Reporter of THE WALL STREET JOURNAL ... So far, it hasn't been easy. Last year, CheckFree handled a total of 125 million payments and three million consumers. Combined with its competitors' smaller numbers, the transactions amounted to just 1% of all of the nation's bill payments. CheckFree recently said its goal of boosting subscribers to five million by June will be "more difficult than expected." By 2003, Mr. Kight hopes to have 30 million households. To meet that goal, Mr. Kight will have to change a lot of minds at consumer banks, the linchpin to increased use. For banks, CheckFree's method of online billing is at best a break-even prospect after they have invested in the systems and software to make it all work. They have been slow to sign up for his or any online billing services. One reason is that electronic billing is splintered among so many small players using rival systems -- including dozens of dot-coms and a consortium of banks, besides CheckFree and TransPoint. After all, who wants to invest in a Betamax when VHS is going to be the standard? Billers, too, have been reluctant to start billing customers electronically because of the lack of a common technology. Electronic bill delivery -- in which bills aren't just paid online, but also sent to consumers that way -- save billers money on mailings and payments to banks, for services including "lock boxes," the warehouses where customers send payments, which are then sorted and scanned before crediting to the biller. Without the cooperation of many banks and billers, consumers, in turn, haven't flocked to the technology. The glacial pace of adoption was a major reason TransPoint decided to join up with CheckFree, says Ric Duques, chief executive of First Data, of Atlanta. First Data, in addition to its TransPoint stake, owns major credit-card processing operations and the Western Union money-wiring network. In the three years since it was founded, TransPoint had signed up only 18 or 20 participating billers. "We're saying, 'Oh my God, we've got to get going here.' " Mr. Duques says. "You need to get a critical mass. You've got to have a seamless convenient experience for the consumers." ... The sector is so young that it isn't clear how appealing electronic billing is to consumers. One indicator might be in electronic banking: At present, only six million consumers actually do banking online, representing a potentially limited pool of prospects. For the moment, the process remains just too complicated and expensive for most people. A study by Gartner Group, a Stamford, Conn., consulting firm, indicates consumers don't want to pay more than $5 a month for electronic billing. The firm figures paying bills by snail mail costs about $4.50 a month in postage and envelopes. ... Consumer banks have been slow to sign up with online bill-paying providers partly because they are trying to get a piece of the action for themselves. First Union Corp., Chase Manhattan Corp., and Wells Fargo & Co. last year formed a venture called Spectrum, which is in the early stages of offering a bill-payment product. Bank of America Corp. is currently evaluating whether to hire CheckFree or design its own system. So far only 110 banks and four brokerage firms are hooked into CheckFree. ... CheckFree, meanwhile, has been overhauling its systems, simplifying the system for users and building a sprawling complex outside Atlanta. Mr. Kight says he is aware of the perils of being out front early in the game: A bigfoot rival might step in and snatch his business up. "Being the early leader in a market that has only one percent penetration is good cause to be paranoid," he says. Subscribe to wsj.com Great value. Access to Barron's Online is included. Best of luck.