To attract more customers for its core bill payment product, CheckFree Corp. has started offering banks software from CashEdge Inc. of New York for opening, funding, and transferring money between accounts.
"We can't grow our bill pay base unless we have more online customers from which to tap, and obviously those customers have to have DDA accounts," Jeff Weikert, the senior vice president of CheckFree's consumer service provider business unit, said in an interview Tuesday. "Banks have been very receptive to that notion."
The Atlanta vendor said it has rebranded three applications from CashEdge. Banks can use CheckFree Online Open to open accounts, CheckFree Online Fund to fund them, and CheckFree Online Transfer to move money between a customer's accounts at different financial companies at any time.
Previously, CheckFree did not offer software for opening or funding accounts, Mr. Weikert said. Few banks use the account transfer option it offers through its bill payment product. Some customers used products from other vendors to offer account transfer capabilities.
CheckFree did not actively market the transfer option, which it housed within customers' online bill payment Web pages. Mr. Weikert said that with CheckFree Online Transfer, the service is no longer confined to the bill payment page.
"This was a product set we needed, because our customers said that they wanted it," he said.
CheckFree considered developing the software on its own but decided instead to partner with CashEdge. "We did a pretty thorough analysis on whether to build this ourselves, buy it, or partner," Mr. Weikert said.
His company is marketing the three products to its current bill payment customers, none of whom have signed up to use the products.
Neil Platt, CashEdge's vice president for sales and business development, said the two companies plan to integrate their products. For example, CashEdge could improve risk profiling for its products by using CheckFree data.
Some of CheckFree's rivals have also been expanding their offerings to include functions beyond bill payment. Online Resources Corp.'s Money HQ offers account aggregation and transfers; Yodlee Inc.'s MoneyCenter offers those features as well as account funding. Online Resources uses CashEdge to provide those functions, while Yodlee developed them internally.
Beth Robertson, a senior analyst at MasterCard International's TowerGroup Inc. research unit in Needham, Mass., said CashEdge brings a number of benefits to CheckFree.
"CashEdge has a strong position in the market, and has an established base of some very good customers," including Citigroup Inc. and Bank of America Corp., she said.
If CheckFree tried to match CashEdge's technology on its own, it "would have required a more extensive redesign" of CheckFree's products without any of the benefits of CashEdge's reputation, she said.
Eva Weber, an analyst at Aite Group LLC of Boston, said online bill software vendors "are in an arms race."
Banks are "looking to build a more robust relationship with the customer right off the bat," and they are looking to their current vendors to get the products they need, she said. "As technology evolves and as customer habits evolve, providing better functionality is going to be key."
