RealTime IT News

Intuit Takes Electronic Clearing House

Intuit Inc. , maker of Quicken and QuickBooks accounting software, continued its drive to become an online banker with the $142 million purchase of payment processor Electronic Clearing House .

Combined with its recent $1.35 billion purchase of online banking firm Digital Insight, the acquisition of Electronic Clearing House's ability to clear checks and credits cards brings Intuit one step closer to offering end-to-end financial services.

The deal, which brings Electronic Clearing House shareholders $18.75 per share of the Camarillo, Calif.-based payment processor, is Intuit's latest attempt to reach beyond its limited software sales.

Steve Bennett, Intuit president and CEO, said in a statement the acquisition provides small and medium businesses one portal where all payment forms can be processed and checks can be verified. The deal also provides Intuit with access to new customers, including large retail and hotel chains.

This isn't the first time an e-commerce company has linked up with a payment service in hopes of growth.

"It's much like eBay's decision to acquire PayPal and provide payment services to its clients," Gartner analyst Avivah Litan told internetnews.com.

Like eBay, which saw profits rise after it created an end-to-end payment service for online auction users, Intuit can boost revenue whenever someone makes a transaction within the software. Till now, that extra revenue went to a third-party payment processor.

However, just as Intuit faces the challenge of convincing consumers online banking is safe, the Mountain View, Calif., company could encounter resistance when it tries to convert Electronic Clearing House customers to Intuit software.

Such a conversion will be difficult because enterprises already have relationships with banks and payment processors, Litan said.

What might be Intuit's next acquisition if it wants to remake itself from a software maker into an online-banking powerhouse? If it follows the same path of E*Trade, a brokerage house may be Intuit's next stop, the analyst suggested.