Visa, Mastercard Raise Their Bets On B2B Payments

September 21, 2023
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Visa and Mastercard have announced new partnerships to enhance their business-to-business (B2B) payment services, as the card brands seek to expand their presence in the sector.

Visa and Mastercard have announced new partnerships to enhance their business-to-business (B2B) payment services, as the card brands seek to expand their presence in the sector.

On Tuesday (September 19), Oracle and Mastercard announced a new partnership to help enterprise customers automate end-to-end B2B payment transactions.

The partnership leverages Mastercard’s virtual card platform to help banks and Oracle’s business customers expedite end-to-end financial transactions.

The Mastercard partnership will enable organisations to replace traditional payment methods with secure virtual cards to increase fraud protection. This will also help procurement teams to centrally manage employee virtual card requests, supporting business purchases on demand.

The partnership will also offer virtual cards for supplier invoice payments, which will enable organisations to identify suppliers that accept cards, automate virtual card generation and high-volume payment runs, and streamline the bank reconciliation process.

According to a joint press release, the new offerings will address several pain points that currently exist in B2B payments, such as disparate data, systems and processes across the ecosystem that hinder enterprises and their suppliers from efficiently transacting.

On the same day, Visa also announced a partnership with Swift to enhance B2B payments, albeit in a different segment.

This collaboration is aimed at streamlining cross-border B2B payments by improving the end-to-end speed and transparency of transactions, and giving financial institutions on Visa and Swift networks more routing options for their business customers with real-time status updates and visilibility.

The collaboration will help provide “clarity and enhanced data”, while removing "errors before, during and after the payment”, said Chris Newkirk, global head of commercial and money movement solutions at Visa.

A $25trn market opportunity

B2B has been the focus of the card brands for a couple of years, with both Visa and Mastercard making efforts to enhance their presence and capabilities in the space.

The global trend toward digital payments and away from cash and cheques also extends to B2B transactions, and Visa and Mastercard want to be at the forefront of this transformation.

Additionally, this payment segment could help them diversify their revenue streams and maintain their competitive advantage as they face competition from both traditional and new players in the payments arena.

This trend is taking place in the wider payments ecosystem, where fintech players that have typically targeted consumer applications are now increasingly shifting toward B2B solutions.

In its latest annual report, Visa called B2B payments an “enormous” opportunity, after it moved nearly $1.5trn of such payments in 2022.

The overall global B2B market, however, is estimated to be as high as $120trn, of which around $20trn could be “cardable”, Visa CFO Vasant Prabhu said at a conference last September. This is roughly equal to the size of Visa’s traditional consumer payments business.

Mastercard has also estimated that the B2B payments market is worth about $25trn per annum, with cheques accounting for more than 50 percent of the total transaction value.

Reducing cheque processing by 10 to 50 percent would equate to $1.3bn to $58.3bn savings per year, according to Mastercard.

To tap into this significant opportunity, Visa offers B2B Connect as a multilateral payment network and an alternative cross-border solution.

Meanwhile, Mastercard offers Mastercard Track, a suite of B2B products and services that is aimed at reducing complexity and risk, cutting costs and automating processes for businesses.

It also offers Virtual Card Number (VCN), a credit card that is generated dynamically based on a real card and is used to make business payments.

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