Corporations may gain more control over their working capital and speed the migration of business-to-business payments from checks to electronic payment channels through the use of two separate commercial card services Citigroup Inc. and American Express Co. recently launched, observers say.

Citi on Nov. 8 unveiled Working Capital Analytics, a service that advises corporations on cost-effective ways to route B2B payments, including more effective use of commercial cards and financing for big-ticket supply purchases.

Separately, AmEx in October announced a partnership with SAP, a Germany-based provider of business-software platforms that underpin many business processes and purchases. The companies say the partnership will enable corporations to more easily plan and manage payments through AmEx (see story).

The moves underscore card issuers’ desire to increase their share of B2B payments as spending volume gradually rebounds from the economic downturn, Patricia McGinnis, director of banking group advisory services at Maynard, Mass.-based Mercator Advisory Group, tells PaymentsSource. “With these new offerings, Citi and AmEx are essentially using a combination of commercial card and working-capital strategies to help their corporate customers manage liquidity and drive more overall electronic payments,” she says.

Capitalizing on commercial cards is a wise move, given that B2B spending is picking up and consumer credit card issuers are under struggling with regulatory and competitive headaches, McGinnis says. “While there are all kinds of problems on the retail side of the cards business, commercial cards are pretty healthy, and that’s where a lot of banks expect to see significant growth in the next couple of years,” she says.

Simultaneously, U.S. corporations are beginning to show significant progress in migrating B2B payments from costly paper-based processes and checks to less-expensive, more-efficient electronic channels (see story). 

The individual payment products in Citi’s latest B2B payments offering are new to the market, but packaging such a broad array of payment types together to analyze spending through a single lens is a fresh approach, Amol Gupte, Citi’s North America head of treasury and trade solutions, tells PaymentsSource

 The service harnesses Citi Exchange, a proprietary system that automatically analyzes and helps to route payments to the most advantageous channel. The service links a variety of products Citi has touted in recent years, including purchasing cards for routine, smaller expenses such as for travel and entertainment and for buying office supplies; “virtual” cards, which provide rich transaction data for large, preauthorized payments such as for major materials and supplies; and other, diverse electronic payment methods used in various places around the world.

Citi also can take a raw file of a client’s spending data and use its new analytics tools to demonstrate the best approach to take for a specific payment, including whether to use a commercial card, wire or automated clearinghouse funds transfer, or Citi financing, based on a company’s specific circumstances, Gupte says.

“When we look at a company’s total $8 billion spending, now we can identify large chunks, such as $2.5 billion, that might qualify for supply-chain financing, and we can find other pieces that would work best through other payment channels, such as commercial cards,” Gupte says.

AmEx’s latest B2B offering has a different twist. By partnering with SAP, AmEx can build links directly inside corporations’ existing supply-chain systems to more easily plan, track and analyze spending across the organization, Andrew Jamison, vice president of B2B product development for AmEx’s Global Commercial Card unit, tells PaymentsSource.

“Rather than requiring a corporation’s data to fit into AmEx’s technology, we have created a partnership enabling AmEx’s systems to automatically dovetail with one of the most common systems many corporations already have in place,” Jamison says.

The AmEx-SAP partnership makes it “seamless” for companies to adopt AmEx’s analysis and payments systems, which corporate and purchasing cards, virtual card accounts, wire and ACH funds transfers, and direct supplier financing.

Handling corporations’ broadest B2B payments is somewhat new turf for AmEx, whose B2B offerings almost exclusively were centered on T&E card services until a decade ago. AmEx began a heavier push into general B2B payments in 2006 with its purchase of B2B payments specialist Harbor Payments, and in 2008 AmEx acquired GE Money Corporate Payment Services, which included some 300 corporate card accounts and a patented electronic payment and settlement tool called vPayment.

 “Corporations are asking for more help in managing their payables so they make ideal use of their working capital based on the cost of funds and other variables,” Jamison says. “We see our ability to bring our commercial card offerings together with short-term credit and supply-chain financing for corporations as the next big opportunity in B2B payments.”

In core B2B payments, buyer-initiated purchases through various channels average $30,000 each, Jamison notes.

AmEx’s alliance with SAP is “a move in the right direction,” McGinnis says. “AmEx has a strong position in the market in providing rich data surrounding corporate travel-and-expenses data, and clearly they want to expand into mainstream B2B payments. For large multinational companies looking for enhanced data-aggregation for their payments, AmEx’s SAP deal could be an enhancement,” she says.

JPMorgan Chase & Co.’s J.P. Morgan Treasury Services also offers an expanding array of B2B payments, including a proprietary service that automatically analyzes corporations’ best options for spending through commercial cards, or ACH or wire funds transfers.

J.P. Morgan’s Order-to-Pay B2B payment service, incorporating financial-settlement technology from Xign Corp., which it acquired in 2007, has “hundreds” of clients, a spokesperson tells PaymentsSource.

Only the top “five or six” banks in the U.S. are candidates to develop proprietary transaction-management and analysis tools, McGinnis says. The rest will use a combination of third-party services and a variety of services Visa Inc. and MasterCard Worldwide offer to support corporate customers’ B2B payments, which will provide similar results “with some differences,” she says.

As B2B payments grow, competition among top commercial-payments providers is increasing. The latest offerings provide integrated analysis of payments through diverse channels, with the goal of expanding the number of payments handled through commercial cards and other electronic channels. 

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