In order to solve the problems of cross-border trade and payments small businesses face, Mastercard (NYSE: MA) and Microsoft have created a new solution to simplify the process of doing business around the world.
Mastercard Track integrates with the existing procure-to-pay process system a business has in place. It then strengthens third-party risk management and improves cash flow visibility while lowering the cost of tasks such as accounts payable/receivable with automation.
For small business owners, there is great potential in addressing the global export segment. This is because a mere one percent (300,000) of the 30 million small and medium-sized businesses in the US export. And of those that export, only two percent do so to more than one country, this according to the US International Trade Administration.
By removing the manual processes of identifying and validating suppliers as well as outdated payment systems, Mastercard Track looks to lower the billions of dollars in cost associated with global trade.
This is how Michael Froman, vice chairman and president of strategic growth at Mastercard, explained what is currently taking place in the press release.
Froman said, “While there have been great improvements and innovations in the way consumers pay, the global B2B space remains highly inefficient and paper-based.”
He goes on to say, “This adds hundreds of billions of dollars of costs and burdensome delays to global trade. Mastercard Track is a tool that will help reduce frictions in the global trading system and promote increased exports – especially by small and medium-sized businesses.”
A More Efficient Buying and Selling Process at Scale
Peggy Johnson, executive vice president, Microsoft, said this new partnership will provide a more efficient buying and selling process at scale.
This Johnson said will help organizations of all sizes to drive value in the front and back office of the organization.
Mastercard is going to bring its B2B assets including account-to-account and card payment solutions, fraud management, data analytics, and payment gateway services. For its part, Microsoft will provide its global Azure cloud ecosystem to run Mastercard Track.
This will be combined with a partnership of nine B2B networks and procure-to-pay solution providers: Basware, BirchStreet, Coupa, the Infor GT Nexus Commerce Network, Ivalua, Jaggaer, Liaison Technologies, Tradeshift, and Tungsten Network.
When it is fully operational a Track Trade Directory will allow users to maintain, retrieve and exchange important information about themselves and their trading partners. The directory will have more than 150 million company registrations worldwide, which is kept up to date with integrated feeds from more than 4,500 compliance lists.
Payments in the Global Export Segment
The challenges facing businesses in the global export segment include making sense of the many different mechanisms that are in place for getting paid, the lack of transparency, and the fact that most transactions are still done on paper.
With the new solution, the company says account-based, card-based or bank transfer payment systems will be connected along with the purchase order and invoice information. This Mastercard says will streamline and simplify back-office reconciliation.
Mastercard Track will also provide B2B networks, banks, insurance companies, and technology companies a business opportunity by offering value-added services.
Banks, for example, can start providing trade and supply chain loans to businesses on the platform and technology firms can offer enhanced data analytics.
Mastercard Track will go live in early 2019.
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