As banks and their customers grow increasingly comfortable with online transactions, Microsoft has decided to waive fees charged to financial institutions for use of its Money software for electronic commerce.
While making it easier for institutions to implement online financial services, the move also helps consolidate Microsoft's position against rival Intuit's Quicken in this fast-growing segment of the banking industry.
"The goal here is to encourage greater connectivity to the Microsoft Money product," Thad Westhusing, partner marketing manager of Microsoft's desktop finance division, said Monday. "The consumer will clearly benefit as more institutions become Money-enabled."
More than 80 banks and financial institutions already offer home-banking services to Money users who can access their accounts via direct Internet connections or through private networks. Beginning this fall, Money will also support the new Open Financial Exchange specification for online transactions.
Wells Fargo Bank was quick to welcome Microsoft's decision Monday. "We view this move by Microsoft as a win-win situation for both our customers and ourselves," said executive vice president Dudley Nigg. "Microsoft's decision to eliminate fees will enhance our efforts to support Microsoft Money and Open Financial Exchange as an option to customers interested in connecting via the Internet to Wells Fargo."
However, a Wells Fargo spokeswoman observed that the San Francisco-based bank, like most others, will still have to pay a processing fee for online transactions separate from the fee previously charged by Microsoft for front-end access to consumers. Wells Fargo's electronic commerce is processed by CheckFree, which is affiliated with Intuit.
"This processing fee isn't going away," said Joyce Thom, senior product manager for Intuit's PC banking division. "We see Microsoft as matching us because in January we announced that we would not charge anything for connectivity. It's basically a marketing thing."
Nevertheless, other institutions with burgeoning online offerings appeared to embrace Microsoft's move. "Microsoft's elimination of fees makes it even easier for us to provide members with the best possible online banking solution," said Tom Sargent, president of First Technology Federal Credit Union.
In a further move to strengthen the company's online banking resources, Microsoft announced last week the development of a suite of tools for creating secure financial Web sites and other services. The package is slated to hit the market in September.
These applications would support a wide range of Web and home-banking software, including Netscape Navigator and Intuit's Quicken. However, they'd all have to run exclusively on Windows NT servers.
"We clearly see that institutions want the flexibility and choice of offering a variety of delivery vehicles to customers," Microsoft's Westhusing said. "It's a two-horse race between Money and Quicken."
