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CheckFree announced Jan. 2 that it has expanded its software division with the acquisition of Carreker for $206 million. The deal is expected to close by March 31.

Together, CheckFree, the Atlanta, Ga. developer of financial electronic commerce services and products and Carreker, the Dallas, Texas provider of financial payments and consulting technology, will provide the financial industry with a way to combine check and electronic payments.

Carreker will provide CheckFree with its check conversion tools, which let financial users to attain and develop a digital image of a paper check. This allows financial organizations to convert paper checks into electronic items from bank branches, corporate bank offices or bank lockboxes.

“This combination will enable financial institutions and corporations to address a range of challenges, from payments convergence and more complex requirements, to the need for operational efficiency gains and regulatory compliance,” Pete Kight, CheckFree Chairman and CEO, said in a company release.

Carreker will also provide CheckFree with tools for fraud management, risk mitigation and ways to develop its payment processes and risk management capabilities for ACH (automated clearing house), both check and cash.

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The agreement will enable CheckFree to provide the financial industry with platforms and consultancy for check and electronic payments as well as the potential for return on investments.

The partnership between the two companies will also allow CheckFree to use Carreker’s payments consulting services as well as their revenue enhancement advisory services.

“The newly expanded software unit will have the necessary economies of scale to innovate and support the dramatic transformations underway in financial services,” Kight said.

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