Microsoft and First Data Form New Company to Enable Consumers To Receive and Pay Bills Over the Internet

DENVER, June 26, 1997 — Advancing electronic commerce over the Internet, Microsoft Corp. and First Data Corp. today launched MSFDC, a joint-venture company that in early 1998 is scheduled to introduce a service that will enable companies to use the Internet to send bills to, and receive payments from, consumers. Financial terms of the agreement were not disclosed.

The service will allow consumers to access and pay their bills through the branded home-banking services of participating financial institutions, or directly using a Web site hosted by the venture. The service, which will use existing payment systems, will be the first of its kind to provide an end-to-end system for electronic presentment of richly formatted bills and to represent next-generation electronic payment and remittance capabilities. Field trials of the service with participating banks and billers will commence later this summer.

Microsoft and First Data have formed an advisory board with representatives from financial institutions, industry associations and billing service providers to help evaluate emerging customer needs, develop innovative products and services, and satisfy regulatory and information-security requirements. Members of the advisory board include leading financial institutions, American Express Company, Bank of America, The Chase Manhattan Bank, Citibank and Wells Fargo. Major industry associations include the American Gas Association, Edison Electric Institute and United States Telephone Association. Prominent billing service providers include CSG Systems Inc. and International Billing Services.

Microsoft and First Data will be equal partners in MSFDC, which will be based in Denver. The two companies will combine their capabilities in software development, Internet technology and payment transaction processing as well as their established relationships with banks and merchants to deliver the new Internet-based service to consumers. MSFDC will employ a dedicated management, sales and marketing team. The board of directors comprises representatives from both Microsoft and First Data.

“MSFDC is an important part of Microsoft’s strategy to further electronic commerce on the Internet,” said Bill Gates, chairman and chief executive officer of Microsoft. “Microsoft and First Data are creating the first service that seamlessly links billers, banks and consumers through a low-cost, feature-rich bill-payment solution.”

“This is a wonderful opportunity for First Data to bring an important new service to our financial-institution clients as well as to the billers we serve in our payment-instruments businesses,” said Ric Duques, chairman and chief executive officer of First Data. “This fits with our strategy to support Internet commerce payment transactions and is an exciting opportunity to work with Microsoft.”

Consumer participation in electronic financial services is increasing, with electronic bill presentment and payment emerging as one of the first Internet applications to make electronic commerce a reality in everyday life. According to Jupiter Communications, the number of online households performing online banking will reach 4.5 million by the end of 1997 and more than 13 million by 2000. According to On-line Banking Report, the percentage of online banking households that also pay bills online is projected to grow from 33 percent in 1997 to 60 percent by 2000, resulting in a growth rate in online bill payment of more than 80 percent per year. Other sources estimate that each of the roughly 100 million households in the United States receives and pays 12 recurring bills per month, or more than 14 billion bills annually, creating a large potential market for electronic billing services.

The bill presentment and payment service being developed by MSFDC is designed to meet the needs of three principal constituencies of the existing billing and payment system – consumers, billers and financial institutions:

  • Consumers benefit from a consolidated presentment and payment service that is quick, convenient, secure, and available at little or no cost to them. Consumers can retrieve and pay their bills through many access mechanisms supported by the service, including Web browsers, e-mail, personal-finance managers, Internet-ready television, Internet “push” technologies and Web-enabled screen phones. No more paper, envelopes, stamps or checks.

  • For billers, the service can reduce overall billing, payment and remittance processing costs. By tightly integrating the billing and account data with the return payment, the service will reduce the exception-processing costs that billers currently incur in handling electronic payments. In addition, the service provides software that gives billers control over the appearance of their electronic bills, thus enabling them to include advertising, target marketing and electronic coupons along with their bills. These capabilities will give billers a rich channel for delivering marketing messages and strengthening customer relationships.

  • The service will be offered to banks and other financial institutions for use as an integral part of their own online financial services under their own brand name. MSFDC server software supports flexibility in the way financial institutions can integrate the MSFDC service into their home-banking services. Using the server software, financial institutions can maintain the branding and appearance of their services and closely integrate legacy systems to maximize automation and minimize customer-service issues. A “pay anyone” capability (payment of bills that are not presented electronically) will also be available. The service enables financial institutions to increase the feature content of their home-banking services while lowering the cost of providing these services to consumers.

Consumers, billers and financial institutions can access more information on the MSFDC Web site at ( .

Founded in 1992, Hackensack, N.J.-based First Data Corp. (NYSE “FDC”) is a global leader in payment systems, electronic commerce and information management products and services. First Data and its principal operating units process the information that allows millions of consumers to pay for goods or services by credit, debit, or smart card or check at the point of sale, by phone or over the Internet, or to wire money – seamlessly and effortlessly.

Founded in 1975, Microsoft (NASDAQ
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

Microsoft is either a registered trademark or trademark of Microsoft Corp. in the United States and/or other countries.

First Data is a registered trademark of First Data Corp.

Other product and company names herein may be trademarks of their respective owners.

Note to editors : If you are interested in viewing additional information on Microsoft or First Data, please visit the Microsoft Web page at on Microsoft’s corporate information pages, or the First Data Web page at ( .

Advisory Board Media Contact Information

American Express Co.: Emily Porter, (212) 640-4760

American Gas Association: Ron Lynde, (703) 841-8535

Bank of America: Jeff Hershberger, (415) 622-0870

The Chase Manhattan Bank: John Stefans, (212) 270-7438

Citibank: John Skelly, (310) 302-3253

CSG Systems Inc.: Liz Bauer, (303) 804-4065

Edison Electric Institute: Jon Arnold, (202) 508-5000

International Billing Services: Dawne Chandler, (916) 939-4845

United States Telephone Association: Porter Childers, (202) 326-7300

Wells Fargo: Kim Kellogg, (415) 396-3070

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