Why Mastercard didn't delay its B2B service during the pandemic
In the works for months, Mastercard Track Business Payment Service rolls out Tuesday with the goal of improving efficiency around corporate buyer and supplier payments at a time when these processes are uniquely constrained by the coronavirus pandemic.
With cash flow tight and accounting personnel working remotely through the crisis, the level of disruption could possibly be an advantage to driving change, says James Anderson, Mastercard’s executive vice president of global commercial products.
“We didn't foresee this, but we had to roll out during COVID-19 and it's created a bigger appetite for efficiency, and with more people working from home they're suddenly understanding the need to digitize everything — it all makes more sense,” Anderson said.
Track Business Payment Service aims to help more corporations ditch checks and pick the most efficient electronic way to pay an invoice — via card, account-to-account or a cross-border payment service — based on suppliers’ preferences.
The API-based service automatically populates electronic invoices with detailed remittance data to reduce manual work and follow-up inquiries, while giving buyers timing controls to manage their cash flow and achieve early payment discounts where available.
To build scale, Mastercard has recruited almost a dozen partners to act as buyers’ payment agents, in a twist on the way Mastercard built its card-acceptance network more than 50 years ago, Anderson said.
“Just as we relied on banks to enroll consumers for credit cards and acquirers to line up merchants to accept cards, we’re using companies that specialize in B2B payments across different geographies, industries and verticals to promote our service,” he said.
The initial group of agents marketing Track Business Payment Service in the U.S. includes Global Payments, AvidXchange, Boost Payment Solutions, Corporate Spending Innovation (CSI), Fiserv, HighRadius, Tesorio, Veem, Velo Payments, VersaPay and YayPay.
Mastercard hopes to enlist additional intermediaries, including procure-to-pay firms and accounting software and ERP systems that might create links to its new B2B payments hub.
One hitch: So far commercial cards are the only payment option available for Track Business Payment Service. But Mastercard plans to add ACH payments as an option later this year for account-to-account payments, with cross-border payments available as an option by the end of the year or early next year.
“Our goal is to offer the full multi-rail proposition this year so companies can choose their payment method based on the greatest efficiency,” Anderson said.
Mastercard isn’t actually introducing new payment rails as much as reorganizing existing ones, Anderson concedes.
“Payment rails is a loose expression, because what we’re doing is building a new service that sits on existing rails at the intersection of buyer and supplier needs,” he said.
Key machinery underlying Mastercard Track BPS includes its VocaLink unit, the U.K.-based payments-processing firm Mastercard purchased in 2016 for $920 million to gain software and services for account-to-account payments. In the U.S., VocaLink is using a license from The Clearing House, a connection that already powers Mastercard's Bill Pay Exchange.
Transfast, the cross-border payments firm Mastercard purchased last year for an undisclosed sum, will be integrated as an option within Mastercard Track BPS in the coming months, along with international payments-processing assets Mastercard purchased from Nets for $3.2 billion in a deal that’s still pending.
The combination of payments channels Mastercard has braided together gives agents an advantage in an area that’s becoming commoditized as more payments go digital, according to Anderson.
“What we’re working to develop here is a service that provides enough standardization to make it easy for agents to connect their clients, but has enough differentiation to give providers a market advantage,” he said.
Outside the U.S., Mastercard has begun piloting Track Business Payment Service for cards with Paymentez as it works toward a full launch, while more pilots will begin this year in Europe, the Middle East, Africa and Asia-Pacific, Anderson said.
“The biggest challenge in everything we do is overcoming inertia, and COVID-19 has already unlocked some of that by forcing changes in the way people have been doing things for 30 years,” he said.