CNET News.com first reported the merger yesterday after sources close to Paytrust said its executives were at the Pasadena, Calif., headquarters of PayMyBills to close the deal.
The companies are two of the leaders in the burgeoning online bill payment industry, where people can pay their bills via the Internet. Paytrust chief executive Edward G. McLaughlin becomes CEO of the new company, and PayMyBills is to become a wholly owned subsidiary, Paytrust said in a statement.
Princeton, N.J.-based Paytrust, which filed for a public offering in March, withdrew its IPO plans in April citing market conditions, according to filings with the Securities and Exchange Commission.
Privately held PayMyBills is backed by Net incubator Idealab. Earlier this year the company raised $30 million from an investment group that included online brokerage E*Trade.
Online bill payment has been heating up this year, with several large companies looking to stake a claim in the sector. Other competitors in the industry are CheckFree, Bank of America and Citibank.
Besides online bill payment, PayMyBills also offers person-to-person payment, which it began after acquiring PayMe.com, a fellow Idealab company, in April.
Founded in October 1998, Paytrust also offers a service to pay paper bills for its customers. Paytrust posted a $9.5 million loss on revenues of $10,269 last year, according to SEC filings.
The company's largest investors include AT&T Venture Fund II, which holds a 20.5 percent stake, Softbank Technology Ventures, a 16.8 percent shareholder, and American Express Travel Related Services, which holds a 5.6 percent stake.