Benny, I just found it at another site. regards August..
>>>>>>>>>>>>>2/27/98 - MICROSOFT TRIES FOR LEAD IN BILLING
Feb 27, 1998 (RETAIL DELIVERY SYSTEMS NEWS, Vol. 3, No. 4) -- Expect tougher competition in the electronic billing arena as Denver-based MSFDC focuses all its resources on that market.
The First Data Corp. [FDC]/Microsoft [MSFT] alliance has signed four major banks to pilot its system and recently launched a Systems Integrator program designed to help its services infiltrate the industry.
"Yes indeed. I think MSFDC is picking up steam," says Bill Burnham, an analyst with Minneapolis-based Piper Jaffray. "Given all of the resources at their disposal, it was really only a matter of time."
MSFDC is proposing a different economic model, the main component of its competitive edge, he says.
"Rather than charging banks for payment and presentment, as CheckFree does, they are actually offering to pay banks to participate in the program," Burnham explains. "I think anyone who thought that MSFDC was going to be content playing second fiddle to CheckFree is in for a surprise. After all, this is Microsoft we"re talking about here, they always want to dominate."
Four Banks On Board
In the past several months, MSFDC announced pilots with Banc One [ONE] of Columbus, Ohio, Key Bank [KEY] of Cleveland, Norwest [NOB] of Minneapolis and Wells Fargo [WFC] of San Francisco.
Some of the banks are partnered with competitors like Integrion and CheckFree [CKFR], both of Atlanta. Banks seem to be working with multiple partners because no one knows what system will dominate.
Additionally, one provider may establish itself as dominant in just one area, such as presentment, while others do so in another small area, such as processing. With emerging standards, banks hope they can pick and choose modules for each service.
Additionally, banks gain some control over development of future products by participating, says David Fortney with Integrion. "They can keep their fingers in everything and be on everybody"s board and so on."
Jim Campbell, president and CEO of Norwest, which also is part owner of Integrion, declined to comment for this story.
A Foot In The Door
Still, it is a coup for MSFDC to sign a bank that already has partnered with Integrion or CheckFree. In effect, it now has other sales opportunities at those financial institutions.
"I think it"s a big plus," says Warren Dent, MSFDC senior vice president, marketing.
"I think it shows that our system is very flexible because, for example, Banc One will be using Integrion"s home banking system, and for us to integrate our bill service into their system is a good measure of the flexibility and design of our system," he adds.
Additionally, Wells uses CheckFree"s bill payment system, but has agreed to pilot MSFDC"s presentment engine, Dent says.
If MSFDC can prove itself in terms of reliability, speed and quality, it hopes the banks will adopt MSFDC systems in place of Integrion or CheckFree, he adds. But "these people are not going to make light decisions," Dent acknowledges.
CheckFree Not Worried
CheckFree views MSFDC"s entry as water that will make all boats rise, says Laurainda Wilson, a spokeswoman for CheckFree.
The most important difference between the two companies is that CheckFree"s system is closer to actually working live, she says.
CheckFree has contracted with 23 billers to join its EBill program and about half of them are up and running.
Additionally, Chase Manhattan Bank [CMB] of New York is expected to begin offering and processing consumer bill payments on its Web site in the next quarter, she says.
Billers will be operational with MSFDC by late March or April, but integrating with banks" Web sites is more complicated, Dent says.
Fortney agrees it"s a complicated issue, especially as banks buy systems from more than one vendor. "What I would see happening is exchanging bills between the three of us so a biller would not have to sign up with multiple suppliers," he says.
The race to watch is the competition to sign up billers, says Fortney.
"We have no intentions of getting into the biller marketing arena. We will not expand and sell to billers because we are confident in our partnership with CheckFree and others. We do not need to directly go out and sign up these billers," Fortney says.
Main Attractions
CheckFree already is connected electronically to about 50 percent of the country"s billers for payments and 70 percent of U.S. deposit accounts through its partnership with Integrion (RDSN, Dec. 19, 1997, p. 4). But Dent says banks are attracted to MSFDC for several reasons, including:
* Lower cost. MSFDC does not charge banks for processing payments or presenting bills. CheckFree receives average transaction fees of 50 cents. Banks pay CheckFree an average monthly subscription price of $4 per customer bill count of eight;
* New revenue. For payments initiated at a bank Web site, MSFDC will charge the biller extra because the funds are guaranteed. A portion of this fee will be given back to the bank; and
* A system that considers all users. MSFDC garnered input from billers, consumers and banks while building its system. Users can check to see if a payment has cleared without making a phone call. This feature, in turn, lowers costs for banks because it alleviates service calls to their call centers.
Revenues For Microsoft
Certainly, MSFDC is looking to create revenue from charging a transaction fee for bill presentment. However, CEO Bill Gates recently has indicated his company is not interested in charging transaction fees for electronic banking.
Dent reconciles the apparent contradiction like this: Yes, in fact, most of the revenue for MSFDC will come from those fees. However, MSFDC is not creating "new" transaction fees by moving the presentment and payment system to an electronic form. The fees already are incurred by billers that pay the U.S Postal Service to mail bills to customers, he says. Thus, Gates is living up to his promise to not generate revenue from new transaction fees.
Microsoft also stands to benefit by selling its platforms, software and operating systems to MSFDC banks and billers. Billers are charged for software to generate the electronic bills and post them to the banks" Web sites. Of course, it"s easier to set up the system if the bank uses Microsoft"s MIFS system, which costs about $10,000. And the MIFS system is based on Windows NT.
Here Come The Integrators
The Systems Integrator program is expected to ease the entire process (RDSN, Feb. 13, p. 7). The program to certify and educate third-party vendors involved in billing file conversions and translations was kicked off in Redmond, Wash., in late January. This transition will be the messiest part of the MSFDC system, predicts Gary Craft, an analyst with BancAmerica/Robertson Stephens in San Francisco.
"Yet, we would not underestimate this organization as a serious competitor to CheckFree because of its very deep pockets and ability to create market awareness," Craft reports.
MSFDC also creates a threat for banks because it doesn"t have access to clean funds and may process through debits to an automated clearing house (ACH) network. A consumer could enroll independently and preauthorize debits, and billers could enroll for bill presentment knowing funds are available, Craft says. "Notice that the word "bank" is not part of this equation," Craft says.
He predicts Citicorp [CCI] will enroll in the MSFDC presentment system because it could preserve its own bill payment processing service. (Bill Burnham, Piper Jaffray, 612/342-6000; Gary Craft, Robertson Stephens, 415/248-4202; Warren Dent, MSFDC, 425/936-1109; David Fortney, Integrion, 404/607-4025.)
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