Mastercard has set out to simplify B2B payments by combining access to multiple payment types, rich data with the payments and a permissioned repository of more than 210 million registered firms worldwide.
Despite years of efforts to move businesses away from paper-based payments, checks are still the most popular way businesses pay each other. Mercator says they accounted for 47% of B2B payments last year. But that's better than a few years ago when a Bank of Montreal executive said they were close to 80%.
Branded as Mastercard Track Business Payment Service it supports ACH/account-to-account and card-based payments. Using the directory, firms can discover suppliers and see what payment types they prefer.
Payments travel with remittance data, including buyer identification information and corresponding invoice numbers to ease reconciliation and support automated straight through processing for firms that have ERP systems.
“The provides great value for businesses that need to pay each other,” said James Anderson, EVP for commercial products. The network is for lower value transactions than The Clearing House (TCH) real-time payments, he added. TCH uses Mastercard's Vocalink technology, which also powers the UK's Faster Payments and Singapore's real-time payments system.
“Most payment networks are optimized around different transaction types and one dimension can be value. It comes down to a question of how much risk is involved in an individual transaction and then you have to make sure the degree of customer authentication is aligned with that.”
Mastercard offers consulting and advisory services along with the Payment Service — card rails work fine with credit cards and a line of credit from a firm’s bank, but for ACH the firm needs to have money in its bank account, he said.
“We help firms (and governments) choose the right rails and then execute the payments. They have a lot of payment flows — they are both payers and receivers.
“The business world has accelerated, but the payments that enable it are stuck in neutral – paper checks and manual invoicing need to be scrapped, man-hours need to be applied to more strategic roles and back-offices need tools to help streamline operations,” Anderson added.
Dean M. Leavitt, founder and CEO of Boost Payment Solutions, said the repository of buyers and suppliers would “eliminate the friction often associated with the use and acceptance of commercial cards .”
Craig O’Neill, CEO, VersaPay, said the new payment service provides “a flexible new payment alternative that will orchestrate the movement of dollars and data across multiple payment types, an innovation that we believe will make digital payments the preferred choice for B2B transactions.”
Mastercard initially launched Track in 2018 as a trade platform to address identity, compliance and payment management needs.
The Mastercard Track Business Payment Service will be rolled out globally, starting with the U.S. market in the first half of 2020. It is being piloted today by customers in North America ahead of general market availability. Partners involved in the pilot include B2B payments optimizer, Boost; payment solutions providers CSI and TSYS; accounts receivable (AR) software providers VersaPay, YayPay, and HighRadius and accounts payable automation provider AvidXchange.
