Forget P2P: Mastercard and Visa Turn to Larger B2B Payment Opportunities

by Steve Murphy 0

Businessman explaining loan

 This piece is somewhat of a reprise from the many announcements during recent months, whereby the branded card networks have been moving in the direction of broader B2B payables offerings through various partnerships. The distinction between what each is offering to date might be somewhat esoteric for many readers, given the multiplicity of releases around the subject. The major difference we see is the underlying direct-sell broader payables platform approach of the Mastercard B2B Hub (including virtual cards) versus the certification and standardization method for Visa Ready, which allows for easier integration of Visa virtual card capabilities with non-Visa branded (and non-bank) payables solutions across the market.

…after the Mastercard B2B Hub was announced, Visa unveiled its own B2B program, the Visa Ready Program for Business Solutions. The platform is designed to partner with other fintech and payments companies to allow for a streamlined process in bringing innovative B2B solutions to Visa’s clients. According to the press release, some of the areas the program is designed to help innovate include “enhanced data, virtual card integration, payables automation and payment controls.” Several partners have already been approved for inclusion in the platform.

Like Mastercard, Visa management sees the B2B space as a huge opportunity. At the company’s annual Analyst-Investor Day, Visa President Ryan McInerney called the B2B segment a “significant expansion opportunity” where more than half of the payment volume is still negotiated using checks and ACH payments.

According to the article, apparently one of the reasons Visa has adopted this approach is their Visa Direct product, which intends to encroach upon the ACH space through merchant push payment. We are not convinced this is an end game, with more announcements expected. If accurate however, it would be regarded as a longshot in the currently perceived, byzantine-like world of corporate payments, where merchants and buyers often get headaches from the myriad overlapping and confusing options available.

Unlike Mastercard, however, Visa does not believe it’s handicapped by its lack of access to ACH payment rails because of its Visa Direct product. Visa Direct uses the exact same network as all of Visa’s payments but essentially reverses the direction of the payment.

In any event, please stay tuned for the ongoing B2B payments saga, where volumes are many, digitization is underway, clarity is lacking, and opportunities abound.

Overview by Steve Murphy, Director, Commercial and Enterprise Advisory Service at Mercator Advisory Group

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