Dive Brief:

• Bill-pay software provider Bill will try to scoop up more business directly and through other channels after financial software company Intuit called off a six-year co-marketing and embedded bill-pay partnership between the companies. Bill provides services for small and medium-sized business payments.
• “Intuit has decided to compete on payments rather than partner,” Bill founder and CEO Rene Lacerte told analysts during Thursday’s fiscal fourth-quarter earnings conference call. The tie ended in June and Bill’s executives expect their company to lose some clients as a result.
• Of Bill’s 400,000 customers, about 12,000 used its embedded feature in Intuit’s bill pay solution. “While we expect the majority of these micro businesses to churn over the next two quarters, we expect some of the larger businesses to become Bill direct customers,” Bill CFO John Rettig said during the call.

Dive Insight:

For six years, San Jose, California-based Bill had provided Intuit with an embedded bill-pay service within QuickBooks Online. In March, Intuit began offering a white-label bill pay service for QuickBooks powered by Bill rival Melio. 

Customers served through the agreement between Bill and Intuit made up less than 1% of revenue in Bill’s fiscal 2023, Lacerte said. As the market matures, more competitors are entering the space, but Bill aims to lead rather than follow, he said. 

“We believe there’s a much stronger opportunity for Bill to serve micro small business directly and through our strategic partner ecosystem with banks and accountants,” offering those customers more capabilities on Bill’s platform, Lacerte said during Thursday’s call.

Intuit will eventually discontinue Bill's embedded bill-pay service within QuickBooks, and QuickBooks is informing impacted customers about other options, an Intuit spokesperson said by email. Specifically, Intuit is starting to invite some customers to its own new QuickBooks bill-pay offering, with broader availability expected in “coming months,” the Intuit spokesperson said.

“Intuit QuickBooks is dedicated to expanding its platform and delivering new capabilities that support end-to-end money movement for our customers," the Intuit spokesperson said in the Friday email.

The latest news could be troublesome for Bill. “Given concerns from some investors around the potential for Intuit to launch a B2B payments offering and take share from BILL, there could be some headline risk from the announcement,” Goldman Sachs Analyst Will Nance wrote in an Aug. 4 note to investor clients. 

However, if affected customers stick with Bill, “there could be potential for BILL to earn greater economics from these customers, as there would no longer be a revenue sharing arrangement taking away some of the economics,” Nance noted.

Bill also said it expanded agreements with JPMorgan Chase and Bank of America. Bill reported a quarterly loss of $15.9 million, according to a news release. Revenue climbed 48% year-over-year, to $296 million.

In other recent news related to Intuit in the payments arena, PayPal’s incoming CEO, Alex Chriss, comes from that software provider. At Intuit, Chriss currently serves as the executive vice president and general manager of Intuit’s small business and self-employed group. He’s led parts of the business that included thousands of Intuit workers and millions of Quickbooks and Mailchimp customers, PayPal said.