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A sleepy, middle-tier processor of walk-in bill payments and prepaid card top-ups is embarking on ambitious plans to introduce online bill payment, forge more direct links to billers, and build out its network of retail walk-in locations. Under Ronald W. Averett, its new chief executive, Fairfield, N.J.-based IPP of America Inc. expects to expand its walk-in locations from 7,000 currently to 7,500 by year's end and to 10,000 by the end of 2008, with a goal of 3,000 new stores each year. But the move with the biggest potential to catapult IPP into the front ranks of bill-pay processors is Averett's plan to add online payment capability. He expects technical work on those links to start by the middle of next year. With that product in place, IPP will be one of only two processors in the country capable of combining cash-based walk-in bill payment with online bill payment. The other is Atlanta-based CheckFree Corp., which is being acquired by Fiserv Inc., the big Milwaukee-based processor. “This is very much a work in progress,” Averett says of the transformation of IPP he has put in motion since arriving at the company this spring. A veteran of electronic payments, Averett was until the summer of 2006 chief executive of Princeton eCom Corp. He left Princeton shortly after the online bill-pay processor was acquired by Online Resources Corp. Now he sees a lot of potential in IPP, a 14-year-old company that has quietly built up a position among walk-in bill-pay players that ranks it in the next tier after giants like The Western Union Co., MoneyGram International Inc., and CheckFree. “This has been a very silent company with a lot of differentiators, but it didn't know how to articulate those differentiators,” says Averett. One of those distinctions lies in its network of retailers accepting cash payments from consumers who need to pay everyday bills and who often lack cards or checking accounts. IPP has deals with major merchants, including Giant Food Stores LLC and Circle K Stores Inc., as well as payday loan stores, to accept the 900,000 payments it processes each month. The company then processes the payments, including accounting updates to the billers. IPP has direct connections to about 100 of the 800 billers it serves, allowing the processor to offer same-day updates to walk-in payors. A deal announced this week with kiosk-network operator TIO Networks Corp., Burnaby, B.C., will expand IPP's direct links by giving it access to major billers TIO serves, including AT&T Inc. and Cricket Communications Inc. In return, TIO will get access to 4,500 of IPP's locations, allowing it to process payments for customers at those stores. Out of the $2.70 fee TIO charges consumers, it will share a portion with IPP. Averett says IPP's cut is roughly equal to TIO's share, which amounts to 60 cents to 70 cents per transaction, according to Hamed Shahbazi, TIO's chief executive. The agent locations collect the balance. Averett also plans to build up the roster of so-called authorized billers for IPP. The company has historically processed what are called unauthorized payments, or transactions for billers with which IPP does not have contractual arrangements. About 98% of IPP's volume currently is non-contracted. Already, IPP has cut deals with EchoStar Satellite LLC's Dish Network and Verizon Communications Inc. By setting up more such arrangements, IPP will gain more direct processing links for expedited payments and give billers an incentive to promote IPP locations to customers. To expedite this strategy, IPP has gained money-transfer licenses in 31 states, a count Averett says will grow to at least 38 by the end of next year. The expansion of the walk-in network, with added direct links to billers, will lay the foundations for the online bill payment product, Averett figures. The ability to combine both capabilities will not only set the company apart, it will present a formidable competitive advantage, he says. “To build a network of storefront locations to take payments, that's a pretty daunting task,” he notes.
