In a deal that could be the first step in building its own bill-payment service, Fiserv Inc. has agreed to purchase BillMatrix Corp., which provides customers with a way to make last-minute payments.
Norm Balthasar, Fiserv's chief operating officer, said in an interview Thursday that the Brookfield, Wis., technology outsourcing vendor already offers online banking software but has relied on other vendors for bill-payment technology. However, he hinted that the deal could form the foundation of Fiserv's own payment service.
"This is one area where we have not directly participated in, in bill payment," he said. "As we add other bill-payment pieces, we will probably focus these around the BillMatrix business unit."
BillMatrix has direct connections with billers to process same-day payments. Analysts say that only a few other vendors offer this capability, though one is CheckFree Corp., the No. 1 provider of bill-pay services and technology. They said that Fiserv could make BillMatrix the centerpiece of a bill-pay service which it could offer to its online banking customers, and which would match CheckFree's same-day capability.
Fiserv said Wednesday it would pay $350 million for the Dallas payment technology vendor. The deal is expected to close this quarter and would be accretive to earnings next year and neutral this year.
BillMatrix, which has marketed its payment service only to billers, has more than 120 customers, mostly utilities, phone companies, insurance companies, and lenders. It uses the direct connections to let consumers get immediate credit when paying their monthly bills, either through a Web site or over the phone.
Most billers charge their customers a fee for the service, which is typically used to avoid a late fee when paying bills at the last minute.
"A lot of people out there manage their finances on a last-day basis," said Scott B. Walker, BillMatrix's president and chief executive, who would remain with the company after the acquisition. With the BillMatrix service, "once you've completed a session, whether on the Internet or the phone, the bill is deemed paid, and you actually have a credit in your account."
Mr. Balthasar said Fiserv already offers, through partnerships, a consolidated bill-payment service that lets people pay multiple billers from a single payment Web site. Fiserv expects to incorporate the BillMatrix technology to that service, he said.
"We're going to look where there are synergies," Mr. Balthasar said.
Mr. Walker said that when Fiserv buys a company, "they pretty much leave the companies alone."
However, Dan Schatt, a senior analyst for the Boston market research firm Celent Communications LLC, said Fiserv could have some very hands-on plans for BillMatrix.
Most banks build their bill-pay offering around software from vendors, such as CheckFree or the No. 2 provider, Metavante Corp., a unit of the Milwaukee banking company Marshall & Ilsley Corp., but "the one thing banks aren't able to do - and CheckFree and Metavante aren't able to do in servicing banks - is facilitate real-time payments," he said.
Fiserv could offer BillMatrix's 120 direct connections as part of a consolidated service that supports faster payments, according to Mr. Schatt.
CheckFree has said that about 75% of the payments it sends to billers are settled within 24 hours, and that the majority of its bank customers are using the most recent version of its software, which is neccessary to support same-day payment processing.
Mr. Schatt also said that if Fiserv offers same-day bill-pay settlement to banks, the banks would likely charge customers a fee. This could prove to be an attractive new revenue stream.
"The way everything is moving, most banks are eliminating fees for bill payment, but here's one fee they could keep."
Richard K. Crone, the founder of Crone Consulting of San Carlos, Calif., said BillMatrix's same-day service "absolutely" rivals CheckFree's.
"It is vital to the business to be able to provide same-day posting capabilities," he said. "CheckFree has been working on that as an afterthought to the overall services."
He noted that "one in four households has made an expedited payment in the last 12 months, and two thirds of them willingly paid a fee."
Fiserv shares closed down 0.63% Thursday.
