Establishing itself as a marquee player in the electronic bill presentment and payment (EBPP) industry, Metavante has acquired Spectrum, a bill presentment switch, and Paytrust, a scan-and-pay consumer service provider (CSP). Metavante, a payment services provider, is in the risky business of selling end-to-end electronic billing services, along with CheckFree, MasterCard's RPPS and others.
Spectrum, owned and operated by JPMorgan Chase, Wells Fargo and Wachovia, is an IFX/OFX-based system that's headquartered in Atlanta and operated in a Chase data center in Texas. The three owners, along with some 24 other banks, had planned to use Spectrum to switch e-bills between billers and consumer checking accounts, but the project had been stalled by inertia. "It was no secret that the market was questioning whether Spectrum could deliver on its potential," wrote Beth Robertson, an analyst at TowerGroup, in a research note.
But rather than let it slip through the cracks, the banks placed it up for adoption, finding a willing partner in Metavante. "They saw that it was time to turn over the reins to an organization that has the ability to handle large volume transactions," said Hans Myklebust, VP of electronic bill presentment and payment at Milwaukee-based Metavante.
For its part, Metavante gets a proven technology platform that it can integrate with its other EBPP offerings. "The benefit to us is completing an end-to-end solution for electronic presentment and payment," said Myklebust. "Spectrum brought the switch technology as well as the client base to complete the round trip."
Metavante's acquisition of Paytrust, a four-year-old CSP, follows by a year its acquisition of Cyberbills, another CSP. Both firms present bills electronically to consumers, including bills originally in paper form, which they scan and convert to electronic form. Paytrust's bank customers include American Express, Citibank, E-Trade and Capital One. "Paytrust focused on large customers while Cyberbills was more focused on smaller entities like credit unions," said Robertson.
Paytrust adds to the number of electronic billers and bills accessible through Metavante, said Robertson. "Metavante now controls the entire scan-and-pay aspect of consumer presentment services."
The acquisitions are a shot in the arm for EBPP, especially the consolidator model, which has been plagued by slowness to market and consumer apathy. Consumers, according to some observers, would rather pay bills directly at the biller's Web site (the biller direct model). "If Spectrum had gone out of business, the alternatives for switch services would be limited," Robertson wrote. "Now, banks will have several options-Metavante/Spectrum, CheckFree and MasterCard RPPS." At least two of these entities, Metavante and CheckFree, offer an end-to-end solution, she noted.
Indeed, the arguments given by Metavante for the Spectrum and Paytrust deals echo those given five years ago by CheckFree, Microsoft and First Data (which launched MSFDC, a bill consolidator solution that was absorbed by CheckFree).
"Surveys of where consumers want to go to view and pay multiple bills have shown that they want to go to a trusted source," said Myklebust. That trusted source is a bank.
The objective-to build a critical mass of electronic bills that will entice consumers to scrap paper bills-is complicated by the need to glue together various technology components used during the lifecycle of a bill, from creation to distribution to payment. "The fractured and confusing nature of the market has acted as an impediment to adoption of EBPP," wrote Robertson, "as prospective users wait out survival of the fittest and end-to-end ubiquity of EBPP."