Citibank said Monday that it is making an investment in the electronic bill presentment venture formed last year by Microsoft and First Data Corp.
The companies renamed the venture TransPoint, saying Citibank's contribution of equity and technology would improve its capabilities.
The Citicorp stake, which officials said would be less than 33%, would add credibility to the original partnership. Microsoft and First Data had struggled to overcome an industry perception of them as aggressive vendors with designs on the payment system.
While TransPoint has been successful in delivering bills electronically to a roster of 28 billers and five banks that are testing the system, it has not yet developed a robust infrastructure for the back end of the process-bill payment.
Citibank would give the venture the ability to let users pay bills electronically to any recipient, a technology developed by the bank for use in its Direct Access PC Banking program.
"Citi has the knowledge of the banking environment, and many of the needs and interests of retail bank consumers and corporate banking customers, and it is difficult to find all of that in one place," said Lewis Levin, vice president of desktop finance at Microsoft.
Building an electronic bill payment and presentment service from scratch "is a large undertaking of considerable complexity," he added.
"The most important news here is that this opens up Citi's back end, which is cost-effective and similar in size to Checkfree's, to a larger market," said Catherine Allen, chief executive officer of Bits, the Banking Information Technology Secretariat, a division of the Bankers Roundtable.
TransPoint officials said they expected to name several additional bank stakeholders shortly, but declined to elaborate.
Citicorp has been a member of the advisory board created by Microsoft and First Data since the partnership, known as MSFDC, was formed 15 months ago.
"We decided the agenda of the joint venture was in line with the agenda of Citicorp for the creation of electronic commerce for the business and consumer worlds," said Edward Horowitz, corporate executive vice president of Citicorp,
By employing Citibank's bill-payment processing system as a private- label service that other banks can use, TransPoint is endeavoring to send a more bank-friendly message, one observer said.
But Hayden Reed, vice president of product management at Checkfree, said he questioned how banks would react to the idea of a bank's processing its competitors' bill payment transactions.
"One of the value propositions of Checkfree is that we are behind the scenes, and not a bank vying for their customers," he said.
"Bill presentment data is some of the most valuable data in the world."
Scott Smith, an analyst at Current Analysis, called the relationship a "logical pairing of interests," noting that TransPoint needed additional partners to carry out its plans.
"This is no small feat building these large systems," he added. "It is a much harder task than some people make it out to be."
