From: Benny Baga
Friday, Feb 12 1999 7:30AM ET
Reply # of 2614
REPORTER'S NOTEBOOK: Checkfree Chief to Bankers: Go with the Internet
Flow
February 12, 1999
American Banker : Electronic bill presentment and payment took center stage last week
at the Treasury Management Association's electronic commerce conference in San
Antonio.
Peter J. Kight, chairman and chief executive officer of Checkfree Corp., said in his
keynote speech to 700 bankers and corporate executives that the ability to present bills
over the Internet give this back-office function a much higher profile.
"The billing function is no longer administrative," he said. "It is strategic," and will open up
new marketing and communication channels with customers.
The full consequences of the change are difficult to grasp, he added, which may be why
"too many of the bankers in the country are trying to slow down the Internet.
"I am here to tell you it isn't going to work. You are not going to slow it up."
Checkfree said recently that it had taken a step toward speeding the progress of Internet
billing by agreeing to deliver bills through an undisclosed Internet portal site.
On the occasion of that announcement, Mr. Kight said, he arranged for a battalion of
public relations people to answer an expected rash of angry calls from banks that might
have considered themselves Checkfree's primary channel for delivering bills.
Mr. Kight said he breathed a sigh of relief as it became clear that many bankers were
supportive of his dealings with the portal, rumored to be Yahoo Inc.
"The calls that came in were saying, 'This is the right thing to do, we need to play, we
couldn't get there on our own,'" Mr. Kight said.
Daniel Nolle, a senior financial economist at the Office of the Comptroller of the
Currency, had an optimistic message for lagging bankers.
Many of the conference sessions, he said, were "not on emerging payment options, but on
existing ones" that have failed to live up to expectations. "Potential participants have not
completely missed the boat. "
Banks that have "not gotten on board with this are not that far behind, " he said.
They have until 2001 to jump in, based on a prediction of the Treasury Management
Association, a sponsor of the EC '99 conference along with the National Clearinghouse
Association. That is when a critical- mass of billers will be presenting bills electronically,
said Arlene Chapman, director of payments and standards at Bethesda, Md.-based TMA.
The movement is slowed by billers' having to confront a host of diverse bill payment and
presentment models. "I do not think there is a consensus, " Ms. Chapman said.
Houston Power and Light Co. is "probably" going to use a consolidator model, which
requires it to pass summary details to various portals and banks, said Cassi Gittings,
product manager. The utility's bills would be consolidated with those of other providers.
Specific billing detail would be maintained at the utility's Web site, giving Houston Power
and Light an opportunity to cross-sell products to customers who go there.
Ms. Gittings said the utility must develop partnerships with bill consolidators and banks
because "there are just not a whole lot of reasons for (consumers) to go to our Web site."
An alternative approach would be biller-direct, in which customers must get and pay bills
at a biller's site. A third is the desktop consolidation model, in which bills or bill
notifications from many billers are e-mailed to personal computers.
Nolan L. North, vice president and assistant treasurer of T. Rowe Price & Associates
and a member of the TMA's Payments Advisory Group, put in a plug for the Financial
Services Technology Consortium's E-check.
He called the e-mail-based analog for checks "a fascinating development. It reduces costs
all through the system. There is no paper involved, and there is no lockbox."
The problem is that it is "a very closed system," he said, requiring software and hardware
installations by all parties involved in a transaction.
A 12-month pilot of E-Check, involving the U.S. Treasury Department, BankBoston,
BankAmerica and 50 contractors, is expected to end in June.
Brett Smith, project manager at Treasury, said the goal is to hit 1,000 transactions a day -
potentially $1 million in volume.
"We expect it to start going commercial effective in year 2000," said Linda Coven, senior
product manager at BankBoston.
Accounts of the death of the SET credit card payment protocol have been greatly
exaggerated, said Alan Clark, market segment executive at International Business
Machines Corp.
The Secure Electronic Transaction standard, designed to authenticate all parties in an
on-line card transaction, has a business value that will grow over time, he said.
Internet merchants are currently comfortable with SSL, the Secure Sockets Layer
standard, which assures that transactions move unmolested from point A to point B. The
problem is that SSL does not vouch for the validity of those points.
"If fraud grows, it will become pretty costly," Mr. Clark warned. Then, he said, merchants
will "start pushing for SET." He said 50 credit card processors and 75 banks are using
SET, mostly in Europe.
"When the baby was born, our customers-the banks-declared it ugly," Mr. Clark said. "We
are doing a few things to grow the baby, and we are starting to put a little makeup on it so
it looks a whole lot better." Copyright c 1999 American Banker, Inc. All Rights Reserved.
americanbanker.com
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