The future of payments is here, it’s just not evenly distributed, small and medium businesses would say.
Mastercard wants to even out the field.
The company announced the Mastercard B2B Hub this week to provide SMBs with a platform to manage every step of commercial payments, from invoice processing to digital payments to suppliers, as opposed to the (still) traditional check.
“We’re moving from a paper-based system to a more electronic one,” Richard Crum, senior vice president of new product development for Mastercard, told Bank Innovation. “Larger companies have the ability to invest in technology; [SMBs] have not been able to have those investments.”
Moving from checks to a digital payments system isn’t as exciting a step as, say, putting an artificial intelligence project on a blockchain to conduct payments—but one that definitely needs to happen before the other, and it isn’t easy for many, René Lacerte, CEO of Bill.com told Bank Innovation previously.
“Getting rid of checks and automating the back office is still hard for many companies,” he said. “More than 50 billion paper checks came out of the rotation in the last 20 years, but some businesses still rely on those. This is mainly because the physical paper provides this feeling of security and confidence to those companies.” Coming up with simple, automated solutions, which provide customers with the same sense of security, as checks do, should be top of mind for the industry, he added.
Mastercard’s hub will launch later in 2017, partnering with invoice automation and payment processor company AvidXchange in order to integrate more closely with SMBs.
“Small businesses want to make their payments from their personal accounting system, and there are about 250 different [systems] to work with,” Crum said.
Just over half of businesses in the U.S. still make payments using paper checks, according to Mastercard, a number that includes larger corporations—when it comes to SMBs alone, about 70% of businesses conduct B2B payments on paper.
“This network will allow SMBs to make virtual card payments, settle electronically, and eliminate paper checks,” Crum said.
The launch of the hub marks the latest move by Mastercard against bulky, time-consuming, and costly paper processes. The hope, according to Crum, is that SMBs will finally be able to step into the waiting world of digital, so the distribution of the future can come just that little bit faster.2 - Readers Like This Post