Mastercard Inc. is stepping up its efforts in commercial payments, announcing its new Mastercard Track Business Payment Service in conjunction with its investor day on Thursday.
The new service could help Mastercard
take a bigger piece of the market for business-to-business payments, which the company estimates to be much larger than the market for retail payments, by offering a digital solution that helps businesses pay one another. Many commercial payments are still handled in an old-fashioned manner, involving checks and invoicing, but businesses generally aren’t inclined to use traditional credit cards for these supplier purchases.
Mastercard’s solution builds on its existing Track offering, which was launched last year as a way of enabling those involved in global trade to vet supply partners and handle other risk elements of their businesses. The new payment feature lets companies choose from various options, including account-to-account payments, while transmitting remittance data about which invoices are covered by which payments.
James Anderson, Mastercard’s executive vice president for commercial payments, said that the technology is meant to tackle “a set of problems around business payments that hasn’t yet been solved,” namely the challenges of getting accurate payment data and the need for suppliers to have more control over how they are paid. The company has made several acquisitions over the past few years to boost its capabilities there, purchasing Vocalink in 2016 and announcing its plans to buy Nets’ account-to-account business last month.
Anderson still sees a place for Mastercard’s “virtual card” offerings that give businesses one-time numbers allowing them to purchase goods, but while that segment is showing “tremendous growth,” it only has a “really small” portion of the total market for business-to-business payments, which Mastercard pegs at $125 trillion. Virtual cards are still popular in the travel business, when online operators may have to book a room on behalf of a customer, though Anderson says there are still “huge flows of transactions that realistically will never end up on virtual cards,” underscoring Mastercard’s push for real-time account-to-account payments.
The service will launch in the U.S. in the first half of next year “with very aggressive international plans,” according to Anderson, and it will be available through Mastercard partners.
Business-to-business payments have been a hot area of financial technology recently, with Visa Inc.
announcing the launch of its B2B Connect platform in June.
Mastercard shares are up 43% so far this year, while the S&P 500
has risen 20%.
View more information: https://www.marketwatch.com/story/mastercard-gets-more-serious-about-commercial-payments-with-new-offering-2019-09-12