To Kelli Schultz, the president of iPay Technologies LLC, the key to winning bill-pay contracts with small banks is being able to handle everything.
"Community financial institutions want somebody who can do it all for them," Ms. Schultz said. "That is all we do."
iPay has been offering bill-pay services since 2001, but it kept a low profile until October, when it landed a contract with one of the four largest providers of core processing software and services, Jack Henry & Associates Inc. That added more than 1,000 bank and credit union customers to iPay's roster, which now totals about 2,500.
iPay signed up 350 other new clients last year to its hosted service and is adding 30 to 45 customers a month, Ms. Schultz said. "Seventy-five percent of our sales, month to month, are from institutions that are doing online bill pay for the first time or might as well be," she said. "Now they're buying the real deal."
She said one of iPay's chief advantages is that it operates its own call center to handle questions from its financial clients' customers about its bill-pay applications. About half of the Elizabethtown, Ky., company's 260 employees work in the call center, which lets iPay provide service on behalf of financial companies that often cannot do so themselves but do not want their customers' inquiries to be bounced from a bank to a reseller to a vendor.
Ms. Schultz would not provide revenue figures for the private company but said it is "very profitable."
iPay has three versions of its bill-pay services: a bare-bones offering, a more comprehensive version that offers the most-used payment functions, and one that has the same types of features used by all the major banks.
iPay will continue to focus on small and midsize banks, and expects to be able to enroll new customers in that market for another two to three years. "Our sweet spot is $10 billion and below," Ms. Schultz said. "We never wanted to be a contender in the top-300 space."
However, iPay will face competition from a big player in Fiserv Inc. of Brookfield, Wis., which in December bought CheckFree Corp. of Atlanta, the leading provider in electronic bill payment and presentment. Though CheckFree has historically focused on big banks, Fiserv has a strong position in community banks and has promised a push into the market for bill-payment services.
Ms. Schultz said the Fiserv-CheckFree combination will likely become a major competitor in her segment someday, but not soon, because Fiserv will need time to integrate CheckFree's technologies with its own and to bring the combined capabilities to market.
"We're taking advantage of every day we have," she said.
Michigan State University Federal Credit Union in East Lansing switched from an in-house system to iPay's system in November.
Jeffrey G. Jackson, Michigan State Federal's vice president of member services, said the $1.5 billion-asset credit union is scheduled to convert its members in March. iPay's ability to transfer funds to and from members' accounts at other institutions and the processor's focus on eliminating errors carried a lot of weight with the credit union, Mr. Jackson said.
"Everything is structured to make sure the payment is correct on the front end, so we don't have to go in and do research on the back end" if a member complains about a payment not posting properly, he said. "Their future is dependent on making this product work well."
At the time of Jack Henry's switch to iPay, Vernon E. "Pete" Hopkins Jr., Jack Henry's general manager of Internet solutions, said his company's goal was to boost electronic payment completion, which stood at 61% in October, to as high as 75%.
iPay has "a simpler and quicker process for signing up billers in their local areas," Mr. Hopkins said then. "We can implement changes much faster with iPay."
