Mastercard has partnered with tech-based working capital solutions provider Demica to roll out supply chain finance (SCF) capabilities to its B2B customers.
The collaboration will see Demica add its technology platform into Mastercard’s Track Business Payment Service (Track BPS) on a white-label basis. The solution enables suppliers to access reverse factoring, approved payables finance and similar working capital solutions, as well as get improved access to what Mastercard calls “competitively priced” early payments.
First launched in 2018, Mastercard Track is a trade platform that brings together numerous 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 in one place. This is particularly beneficial to suppliers around the world, who often use multiple platforms for different buyers.
Its Track BPS service, which was unveiled in 2020, adds onto this with an open loop network that simplifies and automates the set up and execution of business payments using multiple payment rails, as well as enabling the exchange of payments-related data.
With this new partnership, Mastercard is now embedding SCF into its offering, which it says will increase access to working capital while lowering costs, reducing complexity and risk and accelerating automation when businesses pay and get paid.
The funding for the programme will come from the global network of banks and non-bank investors that already use Demica’s platform, explains Maurice Benisty, the fintech’s chief commercial officer.
“Mastercard have partnered with Demica to leverage our multi-funder platform which operates at scale to support the world’s largest banks. Our network of funders will offer Mastercard Track suppliers early payment on their invoices,” he tells GTR. “Therefore, this does not cannibalise anybody’s business. It serves to try and dramatically expand the number of suppliers that have the product available to them in its broadest sense.”
A Mastercard spokesperson declined to give an indication of the volumes it expects to see through the new programme, saying: “Mastercard doesn’t comment on specific volume metrics and figures at this stage of our launch, but we can say we are excited about the interest and partnership with Demica and where this will go in the future as we double down on our commitment at network scale to empower every business to get the working capital they need to thrive.”
However, the SCF market is enormous, and growing. Demica says that it currently has “over US$18bn” of programmes running through its platform, across the full spectrum of working capital products, while Mastercard itself puts the size of the global B2B payments market at US$125tn.
The move by Mastercard is not entirely unexpected. In May this year, when GTR gathered influential senior figures from banks, fintechs and platform businesses to discuss the challenges and opportunities facing SCF, one attendee, Thomas Dunn, chairman of SCF provider Orbian, said: “The next time a group like this meets, I would be extremely surprised if we do not have at least one of the big card companies around the table. Right now, those companies are demonstrating a great deal of appetite for understanding the conversations we’re having, and there are some behemoths that have a natural inclination towards this.”
The new solution is now available on Mastercard’s account-to-account rails in the US, including automated clearing house and real-time payments. The company says it plans to roll out its SCF offering globally throughout 2022.