Web Informant #84, 16 September 1997
(Can you trust Microsoft to pay your bills?)


This summer Microsoft began a joint venture with First Data Corp. to create an electronic bill presentment and processing standard. The venture, called MSFDC, builds on a wide range of Microsoft protocols, products and initiatives, including Microsoft Wallet, Marble, and Microsoft Money. First Data is one of the largest credit card issuers and processors in the world. The joint company plans on beginning beta tests later this year, and a final product to come to market sometime in 1998.

Bill presentment is a very arcane but important world to a wide variety of banks, credit card processors, and merchants. It is an expensive process, particularly for those merchants that send out mass mailings of monthly bills, such as utilities, mortgage holders and the like. Naturally, each merchant has built its own system over the years to create and keep track of who's paid and who hasn't, and these systems are incompatible with other merchants.

The opportunity here is to replace paper-mailed bills with electronic ones, saving postage, hassle, and handling costs. It is a huge undertaking, given the number of players that have to work together -- the banks, the bill issuers, the merchants, and the creditors. And let's not forget consumers, who have to trust the online transactions to debit and credit their accounts properly. This trust isn't a foregone conclusion, what with periodic scare stories about on-line snooping and hard-disk scanning products that lift checking account numbers without the user's knowledge.

MSFDC attempts to bring some standards to this process, and make it easier for customers to pay multiple bills online through a web browser. Online bills will have the same or better look and feel to their paper counterparts, and contain wizzy interactive applications that may make paying them almost as much fun as playing your favorite video game. At least, that is the theory. Eventually, consumer finance products such as Intuit's Quicken and Microsoft Money will support MSFDC presentments as well.

This isn't the first time someone has proposed bill presentment online: indeed, CheckFree (Norcross, Geo.) has its own system called E-Bill. Customers of several utilities along with Charles Schwab brokerage have been able to view and pay bills online since earlier this summer. While this effort is the furthest along, it is in danger given the strength that the mighty Microsoft brings to the MSFDC venture. However, if CheckFree succeeds it will put Intuit's Quicken software in a good position of supporting both E-Bill and MSFDC protocols.

Speaking of Intuit and CheckFree, they were part of an earlier effort called the Open Financial Exchange announced last year. It appears that OFX, as it is called, is now part of the overall MSFDC effort, although that may change as both Microsoft and First Data get further along.

And there is a third bill presentment effort: IBM has joined forces with several of the nation's largest banks (including Bank of America, Mellon Bank and others) with another effort, called Integrion Financial Network. This effort is also just getting started, and the IBM group is banking-focussed rather than part of any software or Internet-related group. That spells trouble, given how software-oriented the CheckFree and MSFDC ventures are. Integrion has also acquired Visa Interactive last month.


Let's say you want to get involved in electronic bill presentment. You have many choices. First off, you need to decide what method or methods you'll support for consumers to pay your bills: will they use Active X controls and/or JavaScript applets inside their web browser? Or run proprietary client software? Or piggyback on existing products such as Quicken and Money? Maybe all three.

Second, whom do you trust to be the middleman transaction server? Microsoft is not one vendor that many inside the software industry trust for any partnership, let alone one as sensitive as keeping track of consumer's spending habits. And a similar effort by Intuit failed years ago, leading Intuit to sell that portion of its business to CheckFree. It well may be that the IBM-led Integrion effort will succeed here precisely because it so banking-focussed.

Finally, there is the whole problem over which Internet-based payment schemes to support. Any electronic bill presentment effort doesn't have to use any Internet payments such as First Virtual Holdings or Cybercash -- consumers can merely debit their checking accounts electronically. Plus, implementing these schemes may be more than anyone wants to deal with right now.

I have several recommendations. First off, any vendor interested in MSFDC should get themselves an NT server and understand that any further communications with MSFDC partners will be through software that runs on this server: all of the protocols and operations run only on NT. This could be a problem with certain issuers, who have steered clear of NT because of perceived security loopholes.

Second, I would urge any potential MSFDC partner to carefully read this white paper on Microsoft's intentions with Marble. Marble, a development platform for all sorts of web-based financial services, was intended to do more than just bill presentment. Finally, you should also take a look at the Open Financial Exchange site and stay current on this industry working group.

Overall, there is a great deal of information to absorb, however, and chances are that things will get delayed further into the future rather than not. There are too many bodies in motion here to coordinate under the best of circumstances. I am skeptical that Microsoft, Intuit, CheckFree or IBM can pull off electronic bill presentment anytime soon, so perhaps the best course of action may be to just wait and see what actually develops.

David Strom
+1 (516) 944-3407
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Copyright 1997 Mainspring Communications, Inc., used by permission