Bank of America Inks Deal with Checkfree

FRAMINGHAM (04/27/2000) - Atlanta-based CheckFree Corp. today announced that it will purchase the electronic billing and payment assets of Bank of America Corp. in Charlotte, North Carolina, a deal the two companies said is aimed at letting the bank's online customers "pay everyone for everything electronically."

As part of the deal - which the two companies said is worth about $325 million - Bank of America will receive a 16% stake in CheckFree.

Under the terms of the agreement, Bank of America will receive 10 million shares of CheckFree stock now and another 10 million shares at a later date if it enlists more than 10 million customers to use CheckFree's online billing system. The bank also has to deliver more than 10 million online bills per month in order to qualify for the second distribution of CheckFree stock, the companies said.

CheckFree will receive a 10-year contract to provide electronic billing and payment services to Bank of America's customers nationwide. Meanwhile, Bank of America will offer bill presentment services to commercial banking customers that want to use CheckFree's technology to provide electronic billing and payment options to their customers.

The deal is still subject to regulatory approval.

In a statement, the companies said they expect almost half of the 700,000 customers who already enrolled in an existing online payment service offered by Bank of America to sign up for CheckFree's service, which currently has a total of 3.3 million subscribers through deals with about 120 other companies.

Alan Alper, an analyst at Gomez Advisors Inc. in Lincoln, Massachusetts, said it's still too early to tell if this deal is a "slam dunk" for the two firms.

"On the surface, it seems like a pretty potent combination," Alper said. "Bank of America has a huge customer base, and I'm sure that was something CheckFree was salivating about. But this is a performance-based (deal). Bank of America earns shares if it delivers CheckFree the business."

Pointing to a deal struck among Wells Fargo & Co., Chase Manhattan Corp. and First Union Corp., which launched an electronic bill payment and presentment joint venture called Spectrum LLC in March, Alper said it's still "too early to tell who the winners are."

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