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Paymap: On the Road to IPO

I know I should use the Web to do my bill paying. After all, this activity wastes a couple hours each month. However, many years ago I did use a system. And it was a nightmare.

But as of now, the technology is much better. Also, it is much easier to use.

A leader in the space is Paymap. The company plans to go public in mid September. The number of shares intended to be issued is 4.17 million at a price range of $11-$13. The lead underwriter is Donaldson, Lufkin & Jenrette and the proposed ticker symbol is PMAP.

The company is an early entrant in the marketplace. It introduced its Equity Accelerator product in 1994. It was a technology that optimized strategies for dealing with home equity loans.

Since then, the company has introduced other products:

1. Just in Time EFT (Electronic Funds Transfer): This product is for last-minute mortgage payments. With the solution, consumers can avoid late charges and fees.

2. Investpay: This product allows investors to set up and execute a plan to allocate investment dollars, such as for mutual funds.

3. NoCheck: This allows consumers to use electronic withdrawls from checking accounts and savings accounts to pay off credit cards. The product is in the pilot stage.

4. Working Mortgage: This provides consumers with the opportunity to take advantage of a cost-effective mortgage from Fannie Mae. In fact, Fannie Mae selected Paymap as the automated clearing house for the mortgage.

5. PAYmatch: This tool helps with budgeting, so as to base the payments of a mortgage on how consumers receive income.

The company has been successful in distributing its product. In all, there are 365,000 paying customers. About $1.2 billion in payments are processed every month.

The company did not spend huge sums to market its product. Rather, the company signed about 40 financial institutions as affinity partners. Examples include: Citicorp, Bank of America, Chase Manhattan, First Union, Wells Fargo/Norwest and BankOne.

In the latest quarter, revenues were $9.9 million, which was an increase of 45% from the same period a year ago. The operating income was $879,000.

The market opportunity for Paymap is enormous. According to the Mortgage Bankers Association of America, there are over 52 million mortgages in the U.S. - representing $6.2 trillion in outstanding debt. Only 2% of these mortgages are being paid with acceleration programs.

Also, it would not be surprising to see the company expand into other markets. But of course, the company has lots of opportunity with its current market space. Expect this to be a strong IPO.