Magazine article American Banker

Checkfree Plans Shift from ACH to Cirrus

Magazine article American Banker

Checkfree Plans Shift from ACH to Cirrus

Article excerpt

A leading electronic bill payment company plans to start phasing out its use of the automated clearing house for processing transactions, moving them instead to the Cirrus automated teller clearing house network.

Checkfree Corp., Westerville, Ohio, is making the transition to speed payment processing and take advantage of a new alliance with MasterCard International, which runs Cirrus.

Checkfree's plan is bad news for automated clearing houses, which want to boost payment volume by handling more consumer bill payments.

Not a Major Threat

"We want to grow volume in that area," said Elliott McEntee, president and chief executive of the National Automated Clearing House Association

But the move is not a major threat, since customer-initiated bill payments were only a tiny portion of the nearly 2 billion clearing house transactions made last year.

The clearing house system has been most popular for electronic deposits of Social Security payments and paychecks, and corporate funds transfers.

The alliance, announced in April, calls for Checkfree to process electronic bill payments for Masterbanking, a new electronic home banking service MasterCard is marketing.

Fraught with Delays

Checkfree now handles more than three million consumer bill payments a month that are initiated on personal computers or touch-tone telephones.

The process it now uses to pay merchants is so fraught with delays that consumers must initiate payments at least four days before the the money is delivered to the merchant.

Checkfree would like to make it possible for consumers to use its service to pay at least some of their merchants in a single day.

Debit Role for Cirrus

This is why the privately held company is planning by next year to migrate from the clearing house to Cirrus, said Mark A. Johnson, executive vice president of business development. …

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