Friday, June 10 2022

As part of its ongoing efforts to help businesses access new sources of capital, Mastercard today (October 21) launched a new B2B supply chain finance offering as part of its Track Business service. Payment. Mastercard’s senior vice president of commerce and B2B solutions, David Trecker, told Karen Webster that the program is not just about providing access to capital, but about doing it at a price that makes sense to suppliers. Mastercard has partnered with Demica, one of the world’s largest working capital fintech companies.

Beginning in North America (US and Canada) and expanding next year, the program will allow suppliers to leverage reverse factoring, approved debt financing and similar programs and gain access upgraded to advanced payments at competitive prices, one-time registration and standard agreements. .

In addition to filling the working capital void for vendors without any access to vendor financing tools, Trecker said the solution will help those who have access to them get better pricing when discount rates are based solely on supplier’s credit quality and not the buyer’s willingness to pay. .

“[In traditional settings] the buyer doesn’t get working capital and the suppliers don’t get the financing and no one is happy,” he said.

Join the Mastercard Track network

Trecker said the supply chain finance feature is an opportunity to attract new players to Mastercard’s Track BPS while serving those who have already signed up.

Read more: Mastercard deploys Track Business payment service in the United States

He sees initial demand coming from a variety of players – ranging from a consumer goods company with 50,000 suppliers that has only onboarded “a few hundred” suppliers with its supply chain finance program to freight and logistics players for whom current supply chain frictions only underscore the need for better and more immediate sources of working capital.

With the new offering, Mastercard hopes providers will be paid sooner than is currently the norm, using a single rules-based model. Suppliers will be able to define the parameters around which invoices – when and for what amount – they may want to expedite payments.

“Whether getting paid earlier is a lifesaver or dry powder, suppliers should have the choice to decide value at any time – and choose ‘to turn the tap on and off'” , Trecker said.

Part of the value of Track BPS, he said, is being part of a network that standardizes how information is shared and how risk is assessed. With this information, it would be easy to determine who to fund, when funding is available, at what price and by whom.

Access to this data will drive better results and more innovation in supplier financing, including starting to fund earlier. This is what the industry needs and “absolutely” where Mastercard would like to go.

“[To meet] the needs of a supplier whose cash conversion cycle begins long before an invoice is approved,” he explained.

Consolidation is key

Today’s launch follows a test that Trecker says revealed some interesting points. The days of selling supply chain finance or virtual cards on a stand-alone basis “are increasingly behind us,” Trecker said, adding that the industries are “intertwined” and they all have the same constraints, boiling down to acceptance. The separate networks banks have for cards and SCF need to be brought together to minimize inefficiency and the resulting “higher costs”.

Consolidating information is what will get results, he said, adding, “Let’s stop having small closed-loop microgrids, [and] small islands of data. If you can actually pull it all together, you can do things that you just can’t do today.

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