Intuit Becomes an Electronic Bill-Pay Player With Its Acquisition of Check Inc.

By Jim Daly

In what’s shaping up to be a very busy year in the vibrant world of electronic bill payments, financial-management software provider Intuit Inc. on Tuesday announced plans to buy online and mobile bill-pay services provider Check Inc. for $360 million. Rumored for about a month, the deal comes on the heels of the closures of startups Zumbox and Manilla, and last year’s acquisition of specialty bill-pay provider Official Payments Holdings Inc. by ACI Worldwide Inc.

Best known for its QuickBooks accounting software for small businesses, Mountain View, Calif.-based Intuit also offers the Quicken personal financial management (PFM) software, the Mint.com PFM site, and the TurboTax tax-preparation application. Intuit also has a considerable merchant-acquiring operation through its Intuit Payment Solutions segment that includes the GoPayment mobile-payment service.

Founded in 2008 and formerly known as Pageonce, Check on its Web site claims to have 10 million users. A spokesperson tells Digital Transactions News by email that the company’s network has “12,000-plus” billers.

Barry Saik, senior vice president and general manager of Intuit's Consumer Ecosystem Group, says Check brings to Intuit a platform that offers both bill presentment and payment as well as other needed components, and a sizable customer base. “They hit on all the things you might look for in an acquisition,” Saik tells Digital Transactions News. Saik says that Intuit is pursuing bill pay in order to meet the demand created by what he calls a “core problem” faced by many consumers, that being how to manage finances when up to 70% of households are living paycheck to paycheck.

Analysts see Palo Alto, Calif.-based Check as strengthening Intuit’s PFM offerings. Mint, notes Gil Luria, managing director at Los Angeles-based Wedbush Securities, enables users to keep track of their finances, but it doesn’t have payment functionality. “This [acquisition] in particular takes them one step further into the financial-services realm,” he says. “Check allows you to pay bills.”

What’s more, Check has done a good job in attracting younger consumers open to managing their day-to-day financial lives through mobile devices, says Mark Schwanhausser, director, omni-channel financial services at Pleasanton, Calif.-based Javelin Strategy & Research. “This is a company that has taken a mobile-first approach,” he says.

Check has continually added features to its bill-pay service, such as automatic alerts about bills due and related matters, and minimizes steps that consumers need to take to add new functions onto what they already use, according to Schwanhausser. “At Check, the philosophical approach is, ‘we’re not going to make the customer lift a finger,’” he says.

The acquisition of Check, which has operations in Israel, also fits in with Intuit’s previous acquisition strategy of buying talent, says Luria. “They’re particularly fond of buying companies with good teams that they feel can invigorate their business,” he says.

Intuit said it is paying for Check with cash and “other consideration.” The companies expect the transaction to close by July 31 after regulatory waiting periods expire and it meets other customary closing conditions. After that, Check, which has 86 employees, will become part of the Consumer Ecosystem System Group. Check’s founder and chief executive, Guy Goldstein, will stay on as a vice president and report to Saik.

Check will be part of Inuit's consumer financial products for the time being, but Saik doesn't rule out integrating it with Intuit's products for small businesses in the future. “We're looking at increasing opportunities to tie our customers and services together,” Saik says.

The deal comes at a time of rapid change in the world of bill payment and related services. After three years, online and mobile financial-account manager Manilla LLC said it will close on July 1. Manilla, which is backed by media company Hearst Corp., does not provide bill-pay services directly, but allows users to access billers’ Web sites for payment. Manilla’s demise will come less than three months after digital mailbox service Zumbox Inc. shut down.

Manilla, Zumbox and some other startups have tried to produce attractive returns on investment for billers, publishers and other businesses without “giving the ultimate users enough compelling reasons to change tried-and-true online- and paper-based habits,” Schwanhausser said in a recent blog post.

As a survivor, Check will live on like some other bill-pay technology providers as part of a larger company. Payment software provider ACI Worldwide Inc. now owns the formerly independent Online Resources Corp. and Official Payments Holdings Inc. Part of the attraction of bill-pay companies to suitors is their element of recurring revenues and customer loyalty, says analyst Luria. “When you get a consumer set up with their recurring payees, it’s very hard to get that consumer to switch,” he says.

Last year Intuit sold certain assets of Digital Insight, a banking software company it bought in 2007. The assets included some bill-pay features but were mainly business-to-business front-end systems for banks' Web sites.