B2B payment: why Mastercard’s Track BPS will disrupt B2B

Mastercard’s Track Business Payment Service will advance B2B payment, and here is how

B2B payment is one of the biggest area ripe for disruption in payment. First, it’s a huge market. The commercial payment market is estimated around ~$125 trillion annually worldwide v.s. ~$50 trillion for the consumer payment market. Second, a recent survey (pre-covid) found that more than 50% of the US B2B payment is still on cash and checks. I won’t go into the problems with check payment as I have detailed in my previous article on B2B payment.

The US remain heavy use of checks in B2B payments. Source: Mastercard
Source: Association for Financial Professionals, Goldman Sachs

Not too long ago, Mastercard announced launch of Mastercard Track Business Payment Services (Track BPS). I can’t believe that I missed such an important product launch. I think Mastercard Track will bring significant improvement to the B2B payment space. Before I go into my reasoning, let’s first take a look at the basics of the B2B payment space.

B2B payment background

The B2B payment space is quite complex as there are companies that:

  • sell directly to corporates
  • work with banks (which in turn sell to corporates)
  • sell directly to both corporates and banks or other intermediaries

In addition, there are partnerships between card network and product companies, and between source to pay (O2P) / procure to pay (P2P) / order to cash (O2C) and product companies.

Source: Spend Matters

But at the core, there is ERP (enterprise resource planning) and accounting software. ERP is a software that connects accounting, inventory, supply chain, basically all the information from different department within a company together

Source:Tally Solution

Within the accounting software or the accounting module of the ERP, there is Account Payable (AP) and Account Receivable (AR). In the most simplest form, these are the main blocks of B2B payment. There are many choices of software providers for AP automation as well as for AR. They tend to have industry focus as its highly competitive.

AP automation

Since we already have accounting software, Why we need additional AP software?

  • Automate manual process
  • Digitalize invoices and payments, move away from dealing with paper checks

For example, without it, we would need to manually set up suppliers in the our accounting software. A typical AP software would provide the following features:

  • Payee: Sets up the payee for your AP solution. Can receive invoices by email, direct to the platform, or regular mail. Performs OFAC screening on the suppliers.
  • Payment: Typically offers multiple payment options from ACH, credit card, to paper checks (AP software companies will manually handle checks)
  • Bills: Views bills to be paid with approval process
  • Report: Provides statement like reports that can be used for accounting to analysis reports
  • Detect: Detects overdue bills or other anomalies.

AR management

While AP solution help companies get invoice and pay the invoices. AR solution help companies generate bills and collect the payments. Accounting software can generate invoices, but we need to:

  • digitalize the process of sending the bills and receiving the payments
  • reconcile received payments with invoices.

A typical AR software would provide the following features:

  • Setup: Sets up payer’s info. Like a place for your renters / subscribers to set up an account, so that they can make a payment.
  • Dashboard: Overview of the latest stats, like money received, outstanding, …,etc.
  • Billing: Views all the bills created.
  • Catalog: Group payers. For example, if you have multiple properties, you can have different groupings for the bills.
  • Insights: Analysis based on data. Like offering discounts to early payments payers.

I am not trying to do a tutorial on AP & AR, but knowing the players in the B2B payment eco-systems and why they exist will help us better understand why Mastercard’s Track Business Payment Service is such a great product market fit.

Mastercard’s B2B: Track Business Payment Service

The Track BPS program

Mastercard launched their solution to B2B payment earlier this year, called Mastercard Track Business Payment Program. Some of the highlight features are:

  • Biller directory: MA is able to leverage its massive vendor database to make locating and on-boarding vendors seamless
  • Multi payment rail: MA will offer different payment options. Including a real time payment that is powered by Vocallink (with borrowed license from the Clearinghouse for the US)
  • Standard & compliance: MA will leverage its experience to ensure that the solution has the latest compliance and security standards, such as PCI DSS (Payment card industry data security standard).
  • Transactional level data: MA will be able to provide detailed data along with payments (more on this later!)

My analysis

I am really excited about this product launch from Mastercard because I think it will really help to move the needle on B2B payment advancement / improvement. But more specifically, I distilled to the following 3 reason:

1. Product market fit

2. Payment & Data

3. The biller directory

Product market fit

Talk about product market fit. First, MA stayed true to its nature by providing infrastructure solution. As mentioned there are a number of firms in the space of ERP, Accounting, AP, and AR. It’s a highly competitive space. By providing better infrastructure so that these incumbent firms can built better solution on top, MA not only avoid the competition, but creates a solution that’s in high demand.

Second, by focusing on the infrastructure, MA is able to leverage its experiences, its massive network and vendor information to provide true value, such as suppliers info and validation.

Last, MA will leverage supplier payment agents (like AR) and buyer payment agents (like AP) for its go to market strategy. This gives MA instant access to buyers and sellers, and can further build out MA’s biller directory or other payment data.

Payment & data

Believe or not, one of the reason that companies stay with check is that check offer more information than an ACH payment. As we have went over in the B2B payment background and look into AP and AR solution, one of the key is to reconcile payment with accounting entries. I have heard it’s like “forensic work” matching ACH payment to invoice. MA’s solution of providing transactional reconciliation data is addressing a real problem, and why I think it will be widely adopted.

Perhaps more importantly, in this product offering MA will possess / access / data, and not just any data, but payment transaction data with details. In our digital world, data is KING. Case in point, this reminds me of the most successful fintech company in the world Alipay, which was about to IPO at ~$35 billion, the largest IPO ever. With payment and data, there is so much MA can do or extend (more on this later)

The biller directory

I love it when incumbent can leverage its existing resources into useful value proposition. With the biller directory, MA simplifies the on-boarding for payer and payee, enhance experiences with payment preferences, reduces risk of fraud. As MA works with its suppliers and buyers agents, MA will expand its information base, creating a network effect, the moats around its offering.

The future

MA’s focus on infrastructure, providing transactional data, biller directory is a great value proposition. But I think it’s just the beginning. It’s estimated that revenue opportunity in the B2B payment market is $1 Trillion

Source: Spend Matters, Goldman Sachs

MA has come out and said they are looking to roll out internationally, and has patterned with Veem (for cross-border payments).

As mentioned above, data is KING. And data will be MA’s currency to enter disbursement and working capital area. Imagine using data to help companies better manage capital such as providing the right credit options, forecasting, and optimizing payments. With data, MA will be one of the key player in the $1 trillion revenue market.

And besides opportunities in the typical B2B space, transactional payment data will be useful in other use cases as well. For example, Alipay has used personal payment data to to help merchants by offering functions from interactive marketing, inventory management, smart shopping area (help business choose what product to sell), customer segmentation, and to loyalty management. The same can be applied to the B2B world.


I am really excited at MA’s Track BPS product because it’s providing real value and has potential to really disrupt the B2B payment world. Perhaps this is what we need to really help companies move off the old analog (non-digital) way. In addition, by providing better infrastructure, vendors / software in the space on the application layer can build more exciting & value add features, so stay tuned. It’s just getting started!

passion for #fintech #payments #RTP real time payment #Banking as a Service #digital strategy #blockchain