CheckFree Corp., one of the giants of online bill payment, may be quietly positioning itself to take on PayPal Inc., the giant of online auction payments.
CheckFree has already created a mechanism that lets its customers purchase items from eBay Inc. auctions through mycheckfree.com, and analysts say that is a short step from adding the function to bank bill payment sites.
The Norcross, Ga., company has courted sellers on the popular auction site, and its promotional efforts and advertising seem to aim squarely at PayPal, of San Jose. CheckFree refuses to tip its hand about its plans in the Internet auction business, but observers said it could turn its dominance in bill payment into a significant rivalry with PayPal.
David Fontaine, a spokesman for CheckFree, said it is not ready to discuss its strategy for online auction payments.
Many have tried to topple PayPal with competing services, especially early on. The list of casualties includes Citigroup Inc.'s c2it and eBay Inc.'s own joint venture with Wells Fargo & Co., Billpoint Inc., whose death knell was eBay's acquisition of PayPal in October 2002.
Penny Gillespie, a senior analyst at Forrester Research Inc. of Cambridge, Mass., suggested that CheckFree could be preparing to let users pay for auction purchases directly from their banks' Web sites. CheckFree has something PayPal and its failed competitors do not have, she said: control of the online bill payment market. "The banks, coupled with CheckFree, might actually have a chance to compete with PayPal."
CheckFree's first foray into the activity was introduced at the eBay Live conference last July. CheckFree Auction Payments lets sellers collect payments through CheckFree accounts connected to their bank accounts, from buyers who also use CheckFree's online bill pay.
The auction service has been the subject of numerous limited-time promotions and touted in prominent ads on the new AuctionBytes.com.
In September, CheckFree announced its 50/50 Promotion, which ran through yearend and promised $50 cash to any eBay seller who completed 50 transactions in a month. To encourage sellers to sign up, the company offered the service for free in December and is repeating that offer this month.
CheckFree's auction payments Web site includes a chart boasting cheaper rates than those of unnamed competitors - tellingly labeled "Provider P" and "Provider Y." (Portal Yahoo Inc. and HSBC Bank USA have teamed up to offer Web payments through a service called Yahoo Pay Direct.)
But those promotions have been aimed at sellers. The next step could be enticing the millions of buyers on eBay to pay for purchases with CheckFree.
"What we've done to date has been very targeted," Mr. Fontaine said. "I don't think we've done anything, to date, with the buyers."
Most people who pay bills through CheckFree do so unknowingly: They are using their bank's site, which is routing payments through the company's network. Mycheckfree.com's greatest appeal is to customers who want to pay bills online but whose bank does not offer the service for free.
A link on mycheckfree.com takes users to a window listing every ongoing auction that accepts payment through CheckFree. The roughly 16,000 auctions linked with it earlier this week are a fraction of the 19 million to 20 million auctions and direct sales that typically run on eBay each day. Over 90% of eBay auctions provide the option to use PayPal, and eBay even lets bidders filter out auctions that do not use its subsidiary.
Gwenn Bezard, a senior analyst at the technology research firm Celent Communications LLC in Boston, said: "Quite frankly, I believe that the war over auction payments in the U.S. is over, and it has been over for probably one or two years now, with PayPal emerging as the industry leader."
Ms. Gillespie said a key to overcoming PayPal would be banks' supporting direct auction payments through their own online services.
PayPal encourages users to send payments from both credit cards and bank accounts - options that require submitting additional sensitive information, most notably account numbers.
But, Ms. Gillespie said, "CheckFree has a lot of bank clients," so its entry into the market would be seamless for new users because their banks already have the account numbers.
Mr. Fontaine said that CheckFree had taken no steps in that direction - yet. "I don't know if it's something that we've necessarily looked at," he said. But if a bank approached CheckFree about it, "we would talk with them."
