According to the latest reports, Mastercard has joined hands with tech-based working capital solutions provider Demica to carry out supply chain finance (SCF) capabilities to its B2B clients.
As per the collaboration, Demica will incorporate its technology platform into Mastercard’s Track Business Payment Service (Track BPS) on a white-level basis. Through this solution, the suppliers would be capable of accessing reverse factoring, approved payable finance, and similar working capital solutions, as well as get enhanced access to what Mastercard considers “competitively priced” early payments.
Mastercard Track was first introduced in 2018 as a platform that connects various B2B networks and procure-to-pay solution providers - including Basware, BirchStreet, Coupa, the Infor GT Nexus Commerce Network, Ivalua, Jaggaer, Liaison Technologies, Tradeshift, and Tungsten Network – all under one roof. This is especially beneficial to sellers across the world, who usually leverage multiple platforms for several buyers.
Its Track BPS service which was introduced in 2020, adds to this with an open circle network that eases and automates the set-up and execution of business payments with the help of multiple payment rails, as well as empowering the exchange of payments-related data.
This new association will enable Mastercard to embed SCF into its services, which it explains will improve access to working capital while decreasing costs, eliminating complexities, and risk and boosting automation when the businesses pay and get payments.
The financing for the program will come from the worldwide organization of banks and non-bank financial backers that as of now utilize Demica's foundation, explains Maurice Benisty, the fintech’s chief commercial officer.
“MasterCard has collaborated with Demica to make use of our multi-funder platform that functions at a scale to aid the world’s largest banks. Our network of founders will provide Mastercard Track sellers early payment on their invoices.” He added, “Therefore, this does not use anyone’s business. It serves to attempt and dramatically extend the number of suppliers that have the product accessible to them in its broadcast sense.”
A Mastercard representative declined to give a sign of the volumes it hopes to see through the new program, saying: "Mastercard doesn't remark on explicit volume measurements and figures at this phase of the dispatch of our launch, but we can surely say that we are amped up for the interest and association with Demica and its future scenario as we twofold down on our responsibility at network scale to enable each business to get the working capital they need to flourish."
However, the SCF market is tremendous and developing. Demica explains that it presently has “more than US$18bn” of projects going through its foundation, across the full range of working capital products, while Mastercard itself puts the size of the worldwide B2B payments market at US$125tn.
The initiative by Mastercard is not startling. This year, in May, when the compelling senior figures from banks, fintech and platform organizations to talk about the difficulties and opportunities facing SCF, one participant, Thomas Dunn, administrator of SCF supplier Orbian, said: “The next time a bunch like this meets. I would be incredibly amazed if we don't have something like one of the big card organizations around the table. Currently, those organizations are exhibiting a lot of craving for understanding the discussions we're having, and there are a few behemoths that have a characteristic tendency towards this.”
The new arrangement is currently accessible for Mastercard’s account rails in the US, including robotized clearinghouse and real-time payments. The organization says it intends to carry out its SCF offering all around the world all through 2022.