With a virtual golden retriever named Scout who lives on the home page of its Web site, CheckFree Corp. is showing how it serves two masters.
One is the merchants whose bills it delivers to consumers. These billers specifically requested that CheckFree set up a separate Web site where people can go to have their bills "sniffed out" and presented to them for payment - at no cost.
The other is the banks that contract with the Atlanta company to operate the back end of their online bill payment and presentment services, for which consumers often pay a monthly fee. Banks would prefer that their customers go to their Web sites to view and pay their bills instead of to the "sniffer" site set up for the merchants, www.mycheckfree.com.
The tension is a microcosm of the online bill-pay marketplace. Many consumers are willing to pay their bills online only if they are presented with an e-mail invoice from one of their billers, and many wind up becoming customers of a nonbank billing consolidator, of which CheckFree is by far the largest. At banks' Web sites, online bill pay is a very popular e-banking feature, but setting up a bill-pay service through a bank site can be more cumbersome than letting billers push their bills to you.
CheckFree has operated www.mycheckfree.com since August. Though it does not advertise the service heavily, there is a prominent link to it on the CheckFree home page. The service lets consumers pick their billers from a list of the 265 that contract with CheckFree. Scout, the "CheckFree Bill Retriever," was chosen as a way of explaining that the service goes out to fetch the customers' bills.
The mascot "knows his way to every bill on the Web," the site says. "He's just waiting for your command to bring them to you - for free!"
Randy McCoy, CheckFree's chief technology officer, said the billers that contract with it - they include many of the nation's largest billers - requested the additional links to www.mycheckfree.
"The vast majority of consumers who go to CheckFree.com got there from a biller," he said.
When a consumer goes to the site and keys in his or her ZIP code, Mr. McCoy said, "Scout looks across those other 265 billers," presenting, on average, four to five bills garnered from the visitor's region.
In essence, the site offers another option to consumers looking to locate and pay bills from one Web site, akin to the consolidation model offered by CheckFree's 657 bank customers, the largest of which is Bank of America Corp.
There is no question that the CheckFree site, as an alternative to bank-run bill payment services, is a competitor of sorts.
"Up until now, the consolidation model happened at banks," said Avivah Litan, a vice president in financial services at the research and consulting firm Gartner Inc. But the CheckFree service illustrates that "anyone can become the consolidator for consumers," she said. "That's why CheckFree thinks this" -Scout - "threatens the banks. It takes the portal, or consolidation point, away."
Mr. McCoy denied that, and said CheckFree's bank customers are happy with the service.
"We are not believers in what has been touted as a war between those two models," he said. "We believe consumers will choose each, and probably both, for different reasons."
He also downplayed any friction between banks and billers - other than the large bank card segment, which, he said, "generally want people at their Web sites."
The general view is that anything that helps the online bill-pay business grow is helpful to everyone, Mr. McCoy said. The overriding idea "is to incent consumers by creating a demand and content in the e-bill community, driving consumers to our banking partners," he said.
Ms. Litan was more skeptical. "Banks don't want consumers going to the billers' Web site - they want to manage traffic," she said.
Catherine Graeber, a senior analyst in the financial services group at Forrester Research, said that banks should be less concerned about CheckFree - which is not exactly a household name - than with biller-direct Web sites (in which a biller, such as a telephone company or a utility, bills its customers directly) and free online banking and bill pay services such as the one offered by Bank of America.
"The reality is growth is happening, just not at financial firms," Ms. Graeber said. "Biller-direct sites are stealing valuable customers from the banks."
Ms. Litan agreed, saying that CheckFree's Scout service is "consolidation riding off the success of the biller-direct model." Within the industry, executives "understand the bank consolidator model isn't really moving, except for Bank of America, which did a lot of marketing."
Stephanie Smith, a senior vice president and the manager for online services and products at Bank of America, said people get hooked on the service after they start paying more than two bills.
"Once you get to more than a couple of bills, you are going to prefer a consolidator model," Ms. Smith said.
Mr. McCoy agreed that three was the magic number that gets people hooked. As consumers reach "this threshold of three bills, they begin to appreciate the consolidation that banks can bring to them," he said.
With 4.6 million active online banking customers, Bank of America would seem to have little to fear from www.mycheckfree.com. Since May, when the Charlotte company dropped all fees for online bill payment, the number of its customers paying bills online has doubled.
Just this month Bank of America made some changes to its bill-pay service, including one meant to make it easier to set up the bills to be paid.
"We were losing people at that step," Ms. Smith said. "It sounds simple," but the changes involve things like "being able to set up payees by nickname."
Another addition is a calendar that reminds customers by e-mail when bills need to be paid. Further improvements, such as the ability to set up recurring payments, are planned for the summer, Ms. Smith said.
Ms. Graeber of Forrester said she did not see the dynamic that Mr. McCoy and Ms. Smith described - consumers cottoning to online bill pay once they started paying three bills a month through the Web.
"Half of consumers that use biller-direct Web sites have never banked online before," she said. According to her research, online bill-pay customers make an average eight to nine such payments a month.
Every year since 1998, fewer consumers have looked to financial companies to pay bills online, Ms. Graeber said. In 2002, she said, 28% of new bill-pay customers chose a financial company as their service provider, but the bulk went to biller-direct sites.
Ms. Graeber said banks have made online bill pay too complicated and that the fees most of them charge put people off. Billers, on the other hand, pitch bill presentment ahead of payment.
"Billers lead with, Come in and view your bill, and, once [you're] here, why not pay it?" Ms. Graeber said.
After a four-day respite, Banc of America E-Commerce Holdings Inc. continued its incremental selling of CheckFree stock. On Wednesday its sold 250,000 CheckFree shares, reducing its holdings to 8.7 million shares.
Thursday's securities filing brings to a total of 1.3 million CheckFree shares sold by the Bank of America subsidiary in 18 separate transactions in the last two months.
Christopher E. Penny, an analyst at Friedman, Billings, Ramsey Group Inc., an investment firm in Arlington, Va., said the latest sale by CheckFree's largest shareholder and customer is not a surprise. "CheckFree's business momentum is strong - led by Bank of America," Mr. Penny said. "The big question is to what extent people holding the stock are talking to the people in operations."
