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December 18/25, 2000

E-Payments Get More Tempting

CheckSpace bridges an electronic payment divide for small businesses

More on online payment:

B-To-B E-Payment Offers Benefits To Marketplaces (11/13/00)

TechWeb Finance: E-Currencies Are Going Offline (12/13/00)

Internet Week: ONLINE BILLING (11/20/00)

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mall-business owners are rarely early adopters of new technologies, and their use of electronic payment services is no exception. But a new service from CheckSpace Inc. offering electronic payment integration with a popular small business accounting system may help push merchants to give the paperless route a try.

CheckSpace, which operates an online payment system aimed at small and midsize businesses, this week is expected to roll out a new version of its software integrated with Intuit's QuickBooks, the small-business version of the Quicken accounting system. Customers sign up for the service at CheckSpace's Web site and then use their QuickBooks software as they always have.

Typically, business owners pay bills through QuickBooks by generating paper checks on printers and mailing them. Others use services such as CheckFree Corp. that deliver payments to big financial institutions electronically and print paper checks for recipients who can't receive electronic payments.

The new CheckSpace option aims to expand the number of small businesses sending and receiving electronic payments. Small businesses pay their bills using the QuickBooks software. When they click "print," the payments go directly to CheckSpace and are delivered to the recipient either electronically or by paper check.

CheckSpace is trying to create a community for small businesses and consumers to handle financial transactions as big businesses do. It's added a "pay anyone" feature so customers can send checks to people or businesses that aren't registered CheckSpace customers. Previously, both payer and payee had to be registered with CheckSpace.

To make the software easy to use anywhere, CheckSpace has added a Wireless Access Protocol interface that lets customers pay bills via a cell phone or other WAP-enabled wireless devices.

"There isn't a payment vehicle today that fully addresses the needs of small businesses and that's a void we aim to fill," says CheckSpace CEO Naseem Tuffaha, one of several ex-Microsoft developers who launched the company in October on $11 million in venture capital.

By keeping the process familiar to QuickBooks users, CheckSpace has a leg up on competitors. "It's critical for any business serving the small-business market to integrate with QuickBooks," says Paul Jamieson, an analyst with Gomez Advisors. "To date, it's been almost impossible."

New payment forms such as CheckSpace's are likely to whittle away at the dominance of credit cards for online purchases, says analyst James Van Dyke at Jupiter Research. "CheckSpace is targeting an important growth area--the ability for consumers and businesses to exchange payment via the most appropriate alternative," he says. "And it's never too soon to mount an offensive enabling payments by cell phone."

Already on the horizon, Gartner analyst Avivah Litan says, is competition from Intuit itself, which is about to launch a similar service that likely will be better integrated with QuickBooks than CheckSpace.