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February 19, 2001

Electronic Payment System Operates Like Credit Card

Clareon's Paymode transmits payments and documentation; company signs distribution deal

By Cheryl Rosen (crosen@cmp.com)

More on online payments:

When Every Dollar Counts (2/12/01)

Providian Gets Stake In PayPal Online Payment System (2/8/01)

E-Payments Get More Tempting (12/18/00)

lareon Corp., a startup that in January debuted an online payment system for business-to-business transactions, this month signed a distribution deal with FleetBoston Financial and landed its first direct customer, Amherst Corporate Computer Sales & Solutions.

The Clareon PayMode system electronically transmits payments and other relevant documentation, in a variety of formats. That lets a buyer pay for part of a shipment, for example, then explain what goods aren't being paid for and why. Since January, PayMode has handled $650,000 worth of payments for 54 customers.

Amherst customers will be able to pay the computer company directly from the Clareon Web site or by integrating the software into their financial systems, says director of E-business strategy Frank Brown. Amherst will also add the payment capability to its J.D. Edwards OneWorld enterprise resource planning system; suppliers will be able to pay Amherst directly and the information will flow into the company's accounts-receivable system.

The system will also be used to let new customers make purchases at Amherst's online marketplace. "It's like a credit card, but it only charges $1.50 instead of 2 [percentage] points, and that's a big deal when you're talking about a $3,000 purchase," says Brown.

Electronic settlement can reduce check-processing costs and slash the accounts receivable/accounts payable cycle, says FleetBoston senior VP Ken DeVeaux. Fleet will offer the system and also use it in a financial-services marketplace it's planning to launch later this year. "We're actively looking to develop solutions around invoicing, financing, foreign exchange, and credit," says DeVeaux.

A recent Gartner survey found just 10% of companies expect to use banks for B-to-B invoicing and payment services; 90% say they will turn to technology companies to handle such transactions. Gartner senior analyst Avivah Litan is bullish on Clareon. While competitors such as BankServ and VeriSign Inc. have similar capabilities, she says, "they don't have the same active partnerships."