Business-to-business payments provider Traxpay Inc. will expand its reach by routing B2B transactions across MasterCard Inc. rails.
The Frankfort, Germany-based company has also received $15 million in series B funding from investors, which will also allow Traxpay to reach new regions.
Traxpay, which also has a Mountain View, Calif., office for its U.S. operations, delivers real-time, cloud-based B2B payments with data that allows businesses to monitor and respond to any changes that might occur. The company is pushing for dynamic data to replace what it calls the current inflexible and static payment system in the B2B ecosystem, said Traxpay CEO John Bruggeman.
Traxpay can deliver dynamic B2B payments that take into account modern corporate product ordering systems that carry product photos, contracts, and bills of lading, Bruggeman said. The multi-year partnership with MasterCard and new funding are "really about a geographical expansion," he added. "This will get us into North America and Asia."
Traxpay will use MasterCard's global network to gain potential exposure to more than 150 countries and 22,000 banks, Bruggeman said. Traxpay will abide by all of the requirements and regulations in moving payments through the MasterCard network, including encryption or tokenization of data.
"We can now play with more global players," Bruggeman said. "We knew we could solve the B2B payments problems locally, but we really want to bust through and go global now."
Various companies have tried to advance B2B payments, but it's been difficult to innovate because business payments are "entrenched with paper checks or wire transfers in a system that works and is fairly inexpensive," said Gil Luria, analyst with Los Angeles-based Wedbush Securities.
"If you do want to innovate, you have the challenge of building a network," Luria said.
Because Traxpay differentiates its offering with dynamic data, it makes sense it would use existing rails such as MasterCard's network, Luria added.
As such, Traxpay can position itself as a business-to-business information provider while letting MasterCard handle the payments routing, Luria said.
In addition, MasterCard benefits because Traxpay transactions will "look like a commercial card transaction" and the card brand is trying to build its commercial card business, Luria said.
Traxpay will continue to use SWIFT for international payments as well as the Automated Clearing House if they are the best options for certain transactions, Bruggeman said.
Traxpay's investors include Commerzbank, Software AG, Earlybird Venture Capital and Castik Capital Partners.