Metavante will get Spectrum's software technology and business relationships under the deal, Metavante representatives said. The company is paying for Spectrum assets in cash, said a Metavante representative, who declined to give more financial details of the agreement, which the companies expect to close in August.
Spectrum technology focused on a software "switch" that tied together online payments with online bills. By buying Spectrum, Metavante will be able to integrate its consumer and enterprise bill payment services so that consumers will be able to view and pay bills solely using Metavante's services.
"We identified this as one of the key aspects that we needed," said Hans Myklebust, vice president in Metavante's electronic presentment and payment division.
Spectrum representatives did not return calls seeking comment.
Metavante, whose chief rival is bill payment provider CheckFree, has been on an acquisition streak of late. Earlier this month, Metavante agreed toPaytrust, another provider of online billing and payment services. Last year, the company picked up CyberBills and Derivion. Through each of the mergers, Metavante gained each company's relationships with banks and other billers.
CheckFree doesn't feel threatened by Metavante's string of acquisitions, said Terrie O'Hanlon, executive vice president of marketing at CheckFree. The company already offers an end-to-end bill payment and presentment system similar to what Metavante is trying to develop.
Meanwhile, CheckFree has signed up about 254 billers for its bill presentment services, O'Hanlon said. In contrast, Metavante said it has signed up only about 170 billers, including those acquired through all the company's acquisitions and pending acquisitions.
"Our transaction volume is so much greater than Metavante," O'Hanlon said. "We believe we have the scale and will continue to protect our leadership there."
Spectrum wasin 1999 by Wells Fargo, Chase Manhattan (now JP Morgan Chase) and First Union (now Wachovia) to compete with CheckFree and other companies that act as middlemen in ushering online payments between banks and billers. Although the company later received from eight other major banks and contracted with Sun Microsystems and Netscape to build its billing system, it never posed much of a threat to CheckFree. Many of the banks and billers maintained their relationships with CheckFree and Metavante.
Cracking the nest egg
Consumers are finally starting to bank online
in large numbers--and the hackers are ready.
"If you add it all up, it makes Metavante a much more viable competitor with CheckFree in the (online bill payment and presentment) space," Litan said. "This solidifies their relationships with these banks."
Metavante already has good, existing relationships with Spectrum's founders, but the prospect of picking up Spectrum's contracts and extending Metavante's relationship with them was part of its motivation for buying Spectrum's assets, said Tim Patneaude, also a vice president at Metavante's bill presentment and payment division.
"That certainly was a big part of what we talked about," Patneaude said. "We felt that this was a natural extension of our relationships with them."
Metavante will not acquire Spectrum's employees, although it might offer jobs to some of them, the Metavante representative said.
Banks have spent decades and billions of dollars developing their online banking services. In recent years, a growing number of consumers have started to adopt online bill payment services, although many of them are choosing to view and pay their bills directly through their credit card, telephone and utility companies rather than through their banks.