We’ve said it before – the ePayments market has just shifted into second gear 

We’ve also said that depending on where you are, managing ePayments can be difficult and cumbersome

But then, we’ve countered that by saying that managing vendor payments more effectively is very worthwhile since it can unlock a new level of value within your company

We’ve also said about as much about Networks as any group out there.

Why all the reminders?

Because, last week, Basware, the largest independent provider of procure-to-pay (P2P), eInvoicing, and Network solutions announced a strategic partnership to bring to market a new electronic payment (ePayment) vehicle to market with industry titan, MasterCard, one of the largest payment networks in the world. Vishal Patel and I had the opportunity to speak with Esa Tihila, CEO of Basware and Hany Fam, President of Global Strategic Alliances at MasterCard regarding their announcement.

As many of our readers know, Basware is a longstanding player in the P2P space with a particular focus on accounts payable automation and building out its network via acquisition and organic growth. Like many others in ePayables market today however, the “pay” part of the process was not part of their offering. This new partnership will soon change that. In fact, when taken with its other newly announced partnership (with BravoSolution), the three companies plan to be able to deliver a truly Source–to–Settle solution.

INSTANT ANALYSIS

For an area that has lacked in innovation until very recently,  we have seen a fair amount of activity this year from other solution providers (like this Ariba/Discover announcement). While the traditional forms of ePayment (ACH, card, wire) have grown quickly (but not aggressively)  over the last few years, there is still an abundance of paper check payments in the market. New mechanisms for ePayments have been a long time coming and this particular partnership aims to mix things up and deliver much needed innovation in a global way.

To provide some context to the potential opportunity that lies in front of these two companies, Basware’s network processes 50 million invoices annually, totaling more than US$420 billion across 900,000 trading partners in 100 countries. MasterCard’s international payment network covers over 150 currencies across more than 210 countries and approximately 20,000 financial institutions. The two companies intend to partner at a global level with deeply integrated capabilities/technologies. Another important differentiator (perhaps the most critical) is the fact that this is not another card offering but rather, a business-to-business connection that leverages the MasterCard network and its clearing/settlement infrastructure with financial institutions. The team also noted that they expect to tap into the expertise of third-party partners.

The suite of solutions that MasterCard and Basware will bring to market are aimed at all types of organizations from small businesses to large multinationals and will be focused on three main offerings – transaction solutions, processing solutions and enhanced services (primarily around supplier enablement). While the final pricing structure of the solution has not been announced, the executives indicated that the pricing is going to be aggressive and much more in-line with ACH pricing than anything resembling the interchange rates associated with P-cards. This point cannot be understated as there are numerous partnerships (or acquisitions) between a large financial institution and a technology company that have imploded (or exploded) [JPMC & Xign is but one recent example of a long unsuccessful 5+year implosion] According to the two leaders on our call, this partnership will bring patented and proprietary payment capabilities to market, for example, the ability to initiate single-use transaction numbers for each invoice, something that is not being done in the market today.

Additionally, once the two companies have an integrated set of solutions available, third-party financial institutions (and possibly other solution/service providers) may have access to tools allowing them to leverage the real-time information on invoices and approvals. This will enable them to offer financial instruments and create further efficiency in the financial supply chain.

All in all, a very exciting partnership for both companies and one that we will continue to track, both here and at our sister site Payables Place

Vishal Patel contributed to this article.

Basware & MasterCard are clients of Ardent Partners.

RELATED ARTICLES

BravoSolution and Basware Form Global Partnership to Attack the Source-to-Pay Market

ePayables Solutions (Part 2): eInvoicing & Networks

ePayables Solutions (Part 3): Payments

Corporate Convergence: Finance and Procurement

Tagged in: ePayables, ePayments, P2P, Solution Providers, Source-to-Settle, Technology