Magazine article American Banker

Comment: Fleet to Market Spinoff's B-to-B Payment System

Magazine article American Banker

Comment: Fleet to Market Spinoff's B-to-B Payment System

Article excerpt

A second financial institution, FleetBoston Financial Corp., has now agreed to offer customers the services of Clareon Corp., an Internet payments company that Fleet itself spun off last year.

On Monday, Fleet announced that it would market Clareon's business-to-business payment network, PayMode, to its own 500,000 cash management customers, to help them execute and reconcile electronic payments in real time.

The first institution to announce it would market PayMode to its customers was another Clareon investor, Morgan Stanley Dean Witter & Co. That alliance

was announced in September. Morgan Stanley has invested $10 million in the venture through its MSDW Strategic Ventures Inc. division.

Kenneth J. Deveaux, senior vice president and director of business-to-business e-commerce solutions for FleetBoston, said Clareon's clean flow of payments and digital certificate technology make it "uniquely positioned in the B-to-B payments space."

"Secure payments are going to be essential, especially in a world where buyers and sellers may not know each other," he said.

Clareon is emerging as one of several companies Fleet is counting on to help it streamline payment activities for its corporate customers. Fleet is "building the infrastructure to support a lot of products," Mr. Deveaux said.

Clareon, of Portland, Maine, grew out of a decade-long experiment with electronic checks conducted by the Financial Services Technology Consortium, a bank-sponsored research group.

FleetBoston, a co-sponsor of the consortium's tests with the Treasury Department and the Federal Reserve, spun off Clareon last March to develop the payment vehicle as an independent enterprise.

The banking company contributed about $8 million toward Clareon's development -- $5 million for technology developed before the spinoff. In all, Clareon has secured of $45 million in venture funding. …

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