Intuit Inc. is furthering its strategy to become a go-to provider to small businesses for their payment needs.
The latest component of this strategy — which also involves cross-selling payment services to users of Intuit's QuickBooks desktop financial management software — is Intuit's merchant website services, to which it recently attached payment capabilities.
The new Intuit website service is "a great new front door for us to get people into the Intuit franchise … [and] for us to attach our payments services," Brad Smith, Intuit's president and chief executive, said on a conference call Thursday to discuss earnings for its fiscal second quarter, which ended Jan. 31.
"One of the first things that small businesses need … [is] to get a website and get up and running," he said.
Web Payments also furthers Intuit's services as an independent sales organization.
"This is another pathway into the payments market," said Andy Schmidt, research director for global payments at TowerGroup in Needham, Mass. "Intuit is competing against anyone who can process an electronic payment, whether that is a merchant acquirer, PayPal, Amazon, or Google."
In 2009, Intuit introduced GoPayment, which lets merchants accept payments using special readers attached to smartphones. Under a pricing option that waives monthly fees on the service, Intuit "tripled the daily subscriptions," Smith said Thursday.
Inuit first began offering website building services in 2007 after its acquisition of Homestead Technologies Inc. On Jan. 25, it started offering Intuit's Web Payment option, said Craig Zarmer, group product manager for Intuit's grow your business division. The company has offered PayPal Inc.'s payment service to its website customers since 2007.
"We continue to offer PayPal as a payment option, as we want to give our customers choice in what payment option is best for their individual businesses," Zarmer said in an e-mail.
Intuit offers "a way to make it easier for a merchant to accept payments and to use another product by Intuit," said Adil Moussa, a senior analyst for Aite Group LLC in Boston. Intuit acquired Innovative Merchant Solutions, an ISO, in 2003. Moussa said it was then integrated with QuickBooks.
"The value proposition for the merchant is tremendous, because everything is seamless and can be done from one platform," Moussa said.
Intuit reported its Internet banking users increased by 10%, while bill-pay users grew 23% compared to the same quarter last year. Smith said, "of all the banks that we have, only 25% of their customers are using online banking and 15% are using bill pay."
Schmidt said: "A key impediment to furthering electronic payment adoption is the inability for businesses large and small to make and receive electronic payments."
Web Payments may also give Intuit a leg up over the banks, which have so far not done a good job of supplying payment options to small-business customers, said Stessa Cohen, a research director at Gartner Inc. in Stamford, Conn.
"The banks have geared them toward large commercial companies … smaller customers will often have to look elsewhere for payment options," Cohen said. Intuit's move "creates a stickiness, and it creates a link into Intuit's financial supply chain," she said.
Intuit's revenue increased 5% to $878 million in the second quarter, compared to the second quarter a year earlier. Operating income decreased 20% to $11 million.
