As part of an effort to expand into the emerging electronic commerce market, Checkfree Corp. is teaming up with accounting software providers to create an electronic payment service for businesses.
Beginning this fall, Checkfree plans to offer the Commercial Payment Service, which will enable businesses to pay bills electronically.
The company plans to work with as many accounting systems vendors as possible, but will initially integrate its electronic payment capability into the products of six: Champion Business Systems Inc., CYMA Systems Inc., DacEasy Inc., Data Pro Accounting Software, New England Business Service Inc., and Platinum Software Corp.
Together, the vendors have nearly one million customers, representing close to a billion transactions a year, Checkfree officials said.
Commercial Payment Service will be the first in a series of electronic commerce products Checkfree expects to offer in the coming years. It is positioning itself to play a major role in this developing market.
"This is a logical extension of the patented payment technology that we have provided to consumers for the past seven years," said Peter J. Kight, president and chief executive officer of Columbus, Ohio-based Checkfree. He said that more partners and product extensions will be coming soon.
Checkfree, the nation's largest processor of electronic bill payments, developed the new service in response to market research and customer demand, said Michael Sapienza, the company's vice president of marketing.
The new service will route transactions through financial institutions that can handle financial electronic data interchange, which is the communication of payments and related business documents in standard computer formats.
Checkfree is eager to tap into the approximately nine million U.S. businesses that use accounting or financial software to manage financial transactions, Mr. Sapienza said.
The new commercial service is viewed as an extension to Checkfree's electronic bill payment software for consumers. The consumer software is sold as a separate product and is also integrated into leading personal finance software packages such as Intuit Corp.'s Quicken, Block Financial Corp.'s Managing Your Money, and Simply Money from Computer Associates International Inc.
Checkfree's research shows that approximately 40% of its consumer customers own small businesses, and many of these want to pay business bills electronically. Checkfree anticipates that many of these customers will use the new service, Mr. Sapienza said.
The Checkfree Commercial Payment Service is the first truly universal application of financial EDI services, company officials asserted.
The service is considered universal because businesses don't have to develop the burdensome "trading partner" relationships with large numbers of vendors typically required to do financial EDI, said Checkfree officials.
Businesses also do not need special EDI software. They will be able to electronically pay bills from up to 11 different checking accounts. Payments will include invoice numbers, discount data, and all the standard payment description information. Built-in data encryption and validation will maintain network security.
Although transaction fees have not yet been announced, Checkfree officials said the service will significantly reduce the costs of payments.
According to the company's research, the average small business pays nearly $2.50 to process a check. On the basis of the fee structure it will adopt, Checkfree expects to cut that cost by almost 50%.