Frustration, Confusion As Intuit Raises Fee

Credit unions are responding with frustration and confusion over Intuit Inc.'s pricing implementation for Web Connect, an online banking feature that allows members to download transaction data directly into their Quicken and QuickBooks money management software.

"I'm very disappointed with the new policy and feel the pricing structure is not equitable, unfairly taxing smaller financial institutions," said Sandy Beaubouef, director of Information Systems at the $89-million RiverLand CU in New Orleans.

Web Connect was introduced in 2001, and financial institutions used the service for free for about a year.

RiverLand CU recently discontinued the service after getting a $3,000 bill for one year of Web Connect from its data processing vendor, Beaubouef said.

Joe Pearson, president of CU homebanking and Web Connect provider Data Management Services Inc. in Boise, Idaho, said his client CUs aren't responding well to the fees.

"Most of the credit unions we talk to are pretty mad about the whole thing," Pearson said. "They feel that it has been bait and switch. Quicken has 80% of the market, so they'll do what they want. And now that members are using Web Connect, it's hard to take it away from them."

DMS bargained down the annual fee for Web Connect from $3,000 per year to a figure that is signficantly less, savings it says it will pass along to its client CUs.

An Intuit spokesperson said the policy is not new, and that it has taken pains to inform clients about its strategy and to negotiate a fair pricing structure.

Company Says CUs Were Informed

"Quicken has been pricing Web Connect for some financial institutions since August 2001," Steve Holoien, Quicken and QuickBook's director of financial institution connectivity and support, told The Credit Union Journal. "And all relationships were told that we'd be pricing for connectivity from the beginning."

Intuit, which owns Quicken and QuickBooks, charges for Web Connect according to four tiers determined by asset size, Holoien said. "Our goal is to have pricing that is fair and equitable and tiered to the size of the financial institution."

The first pricing tier applies only to the largest banks, whereas the second tier includes the nation's top 50 CUs.

That leaves the third and fourth tiers, where 99.9 % of CUs are priced.

Beaubouef believes that an equitable relationship can only stem from a pricing structure based on number of end-users, instead of number of dollars.

"As it currently stands, basically all but a handful of credit unions will pay the same price, whether they have 10 users or 10,000 users," explained Beaubouef. "It would make more sense if pricing were based on usage, not asset size.

"In fact, the $3,000 base price will most likely be too steep for smaller credit unions trying to implement Internet banking, especially in the crucial start-up phase. At that price, they simply could not compete with other financial institutions."

Most credit unions fall within the fourth pricing tier, maintaining Web Connect under indirect relationships through their data processing vendors, Holoien said.

It's that relationship that may contribute to confusion and frustration over the pricing structure. Some CUs, including Concho Educators FCU in San Angelo, Texas, are unaware of any changes. Others, such as RiverLand CU and Les Bois FCU in Boise, Idaho, just heard about Intuit's plan in early 2003 and late 2002.

Word Spreads Slowly

"The lowest end of the market is now hearing about it, so it's new to them, but it's not new to us," Holoien continued. "We've been in contact with data processors since November about whether they would support pricing for Web Connect. In some cases, the communication is taking place between the processor and the credit union just now."

The lines of communication just don't work, Beaubouef said. "Unfortunately, we were notified of the change in pricing policy via our data processor, after the fact. Intuit did not directly notify us, the end-user."

Pricing is also dependent upon which version of Quicken or QuickBooks the FI is supporting, Holoien said.

"Many of our pricing relationships are tied to the Quicken version and the fact that we're late into the Quicken fiscal year. So some institutions are getting charged right now, some will be charged in the next month or two, but all of them will be charged by Quicken's July 31 fiscal year-end."

DMS's Pearson said Intuit's pricing approach leaves much to be desired.

"The pricing is all over the place," he said. "Quicken has changed the billing deadline, but they haven't yet turned us into the payment plan. They've told us the price will increase every year, but not by how much.

"They're shooting themselves in the foot," Pearson added.

Holoien disagrees. "Clients that are staying with us are making a conscious decision that a Quicken customer is worth something to them. In the end, we're going to have a lot more committed base of clients."