Academic journal article ABA Banking Journal
Fed Taps Small Firm for EFT Translation Software
The Federal Reserve System has hired a small but rapidly growing developer of electronic payment software, Bottomline Technologies of Portsmouth, N.H., to custom-make a piece of software that is expected to help member banks comply with the U.S. Treasury Department's Electronic Funds Transfer '99 initiative.
EFT '99 mandates that all federal payments-Social Security benefits, tax credits, and payments to companies for products and services-be made electronically.
Bottomline's software will help the Treasury Department and payee banks fulfill one aspect of EFT '99: payments for products and services which are attached to an automated clearing house file, according to Robert Allen, vice-president of the Federal Reserve Bank of Kansas City, who is chairman of the Fed's EDI (electronic data interchange) Work Group.
The Fed will distribute and help deploy the package, expected to be called FedEDI Software, to some 12,000 financial institutions who are connected to Fed Wire during the third and fourth quarters of this year. Fed-sponsored regional training seminars are also expected to be announced in September 1998.
Whether the payment is made via email, fax, or an ASCII format, FedEDI Software is supposed to help banks and their customers make sense of exactly what the payment is for-something which is not always clear, says Bottomline's vice-president of marketing, Phil Grannan.
Big boost for tiny firm
Calling Bottomline a "surprise" winner of the Fed's contract, DuWayne Peterson of Standards Testing Assurance Corp., Pasadena, Calif., says it's clearly "a tremendous endorsement" for the company, "putting it on the map as a player, giving it a lot of running room." Peterson, who formerly held posts as chief of Security Pacific Automation Corp., and executive vice-president of operations, systems, and telecommunications for Mernll Lynch, says it makes FedEDI Software a potential "de facto standard"-and signals "a vote of confidence" for Microsoft Windows NT.
How then, did a little company, with not much more than $20 million a year in revenue, started a few years ago by Dan McGurl (ex-IBM and State Street Bank) and Jim Loomis (formerly of The Nashua Corp.), land such a deal-a sale, if not necessarily lucrative, than certainly a powerful lever for exponentially boosting its Paybase brand EFT software way beyond its installed base of 2,500 corporate and bank customers? …