B2B Payments

For Mastercard/OpenText and the Automotive Industry: Have Trust, Will Trade

Partnership-streamlines-B2B-financing

Mastercard and OpenText have partnered to streamline supply chains and help boost spot trade credit that in turn breaks a funding logjam in the trillions of dollars.  Claire Thompson, executive vice president, Enterprise Partnerships, Mastercard and Joel Kremke, vice president, global sales, OpenText, explain why the companies are targeting the automotive supply chain first — where information spanning 200,000 suppliers can help foster trust and trade.

To keep the wheels of commerce — or the commerce of wheels — turning, trust is key, among lengthy supply chains, and vendors large and small.  In the automotive industry, hiccups amid the supply chain — for deliveries or for payments, can have outsized ripple effects.

Mastercard said late last week that it has partnered with OpenText, focused on enterprise operations management in a bid to streamline supply chain and finance activity.

In a release Thursday, the two firms said they would work together on developing digital ecosystems focused on building trade activity between buyers and suppliers — with an initial foray into the automotive vertical.

At a high level, the solution will integrate payments, boosting cash flow efficiency across vendors and buyers (also as they extend credit to one another), and will use enhanced digital identity offerings to ensure security as payments are made and information is exchanged between parties.

In an interview with Karen Webster, Claire Thompson, executive vice president, Enterprise Partnerships, Mastercard and Joel Kremke, vice president, global sales, OpenText noted that supply chain inefficiencies exist in any industry, and especially so in automotive, where, as Thompson said, suppliers number as many as 200,000 and where supply chain finance can help firms gain scale.

Spurring such trade and financing is big business: As Thompson said, in the fourth quarter of last year, $1.3 trillion of trade finance that was available was not in fact used — hinting at receivables that were uncollected and payables that were not paid.  Trade financing along supply chains can be crucial for smaller firms.  In data that has been estimated by the Small Business Association, and cited by PYMNTS and Fundbox in a recent report titled “The Trade Credit Dilemma,” as much as $3.1 trillion is owed to suppliers for services and products on a given day.

Drilling down a bit, in terms of mechanics, the joint offering will also provide OpenText business network customers — where payment commerce is more than $9 trillion annually across its Supplier Portal and the OpenText IoT platform — the ability to access “spot” financing through the Mastercard Track B2B global trade enablement platform.

She said that the newly announced joint efforts between the companies center on “collaboration within the industry, which has been lacking.  The systems do not interoperate, and processes are patchwork.”  She said that Mastercard Track, which integrates with procure to pay processes (from invoicing all the way to electronic payment), “is not about writing another digital platform that is operating in isolation …but creating a platform that is about access to Mastercard and its partners.” Technology, she said, is the enabler of efficiency.

At the heart of the two firms’ partnership is a single user interface that brings users to the supplier portal functionality and to Mastercard Track, with the latter’s business directory that has outfitted 210 million companies with digital identities.  Those digital identities contain wealth of information, digitally sourced, compiled and shared through supplier profiles in a way that fosters a sense of security amid commerce. Data include details on credit metrics, sanctions and other factors tied to risk analysis. Data also includes details on vendors with parts available that can, in turn, help firms manage inventory and supply chain flow.

And it is that sense of security that is paramount.

For as Thompson put it: If you have trust, you will trade.

In reference to the payment part of the equation, Thompson and Kremke said that payout functionality is integrated in a seamless manner into the platform.  Through procure-to-pay activities tracked through centralized data flow, cash flow transparency allows for what might be thought of “intelligent financing.”

Kremke told Webster that the OpenText automotive identity network helps facilitate the exchange of documents across a myriad of financing and engineering functions.

“They’re already looking at PO [purchase orders]; they’re already looking at that inventory data today. So, imagine then that they’re already doing their collaboration and the whole community is already going to this single spot. Now you add on the capabilities with Mastercard Track,” he told Webster, and the data become actionable.

Individual Level Of Digital Identity

The executives explained that the combination of OpenText identity and access management and Track helps create digital identities that drill down to an individual level.  And, they added, there’s added benefit in the predictability in knowing when funds will arrive through electronic means of payment.  Suppliers have a range of options as to how they prefer to be paid.

Kremke said that “trial ballooning” of the Mastercard/OpenText collaboration (before it was struck) illuminated enthusiasm among “multiple sides of the equation. Suppliers are excited about it; [original equipment manufacturers (OEMs)] are excited about it too” especially from the point of view of risk management.

“It’s not a new digital footprint, but it’s enhancing digital footprint that they’re already using,” he said of the automotive space.

——————————–

Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the December 2019 Mobile Card App Adoption Study, PYMNTS surveyed 2,000 U.S. consumers for a reveal of the four most compelling features apps must have to engage users and drive greater adoption.

TRENDING RIGHT NOW