Mastercard is launching a suite of real-time payment capabilities to grow its value proposition to banks and corporate clients, including a modern twist on ‘cash on delivery’ which lets buyers pay suppliers with one click.
The payments giant announced upgrades to its business-to-business payments and bill pay solutions this week, which the company said will improve customer experiences for banks and consumers. Mastercard will begin piloting the capability to allow suppliers to pay billers in real time later this year. Meanwhile, real-time bill payment capabilities for consumers will launch in the fourth quarter.
According to Ron Shultz, executive vice president of new payment flows for North America at Mastercard, the new features will help businesses reap the benefits of cashless transactions. “Now that we’re converting more of those paper payments to electronic payments, managing cash flow is easier and managing data is easier,” Shultz said. Currently, 50% of business-to-business payments are carried out through cash or check, he added.
Mastercard is beginning its business-to-business payments pilot with the liquor industry, which Shultz said is an important testing ground because the law requires liquor buyers to pay suppliers before the supplier releases the product. In the past, buyers would pay with cash or checks, which the delivery driver would have to ship to headquarters for processing.
With Mastercard’s new business payments solution, which it calls Payment on Delivery, the delivery driver can send the buyer an electronic request for payment. Buyers can simply accept the charges with a swipe or tap, and the money is transferred from the buyer’s bank account to the supplier’s account in real time. Mastercard is using The Clearing House’s real-time payments network to support the instant transfers.
The bill pay solutions, meanwhile, will work with consumer-facing billers, including banks and service providers. Shultz said most consumers have to pay their bills through checks or ACH transfers, depending on the biller. With Mastercard’s new bill pay solution, which it calls Bill Pay Exchange, consumers can pay with cards and real-time ACH transfers, as long as the consumer and biller’s banks are connected to The Clearing House. Real-time transfers help banks and other bill payment companies offer a last-minute option for bill payers. In turn, Mastercard will send confirmations to consumers on behalf of billers when transactions have been completed.
Payment on Delivery is piloting for the remainder of the year with PNC Bank and its corporate clients. The goal is to grow the reach of the real-time business payments capabilities throughout 2020, according to Shultz. Bill Pay Exchange, meanwhile, is launching next month.
Mastercard’s new solutions are the latest in a series of recent moves from payments companies to use automation and real-time transaction capabilities to improve customer experiences. For example, Bento for Business recently rolled out Bento Pay, a Zelle-type payment solution for businesses. Meanwhile, startups Extend and Brex offer corporate cards for business clients, and Bank of America’s Zelle for Business offering caters to small business clients, with daily transaction amounts capped at $5,000.
Bank Innovation Build, on Nov. 6-7 in Atlanta, helps attendees understand how to “do” innovation better. It is designed to offer best practices, to guide the innovation professional to better results. Register here.