Syncada Breaks New Ground in B2B Payments
Visa and US Bank have created a joint venture called Syncada that provides a business-to-business (B2B) network for corporations and governments to process and track invoices, make and receive payments around the world, as well as have payables or receivables financed through local and global financial institutions.
Syncada combines Visa’s experience in delivering commercial payment services to financial institutions and managing a multi-bank network, with US Bank’s PowerTrack, an automated B2B electronic invoicing (e-invoicing), payment processing and trade finance network. The venture allows financial institutions of all sizes to offer their commercial clients standardised B2B invoice processing, financing and payment services across a variety of payment types and local currencies. Financial institutions can also build transaction and credit-based treasury management business by offering the network’s services to buyer and supplier clients.
Syncada has begun operations and initially serves US Bank and its legacy client base from the PowerTrack network, which was launched in July 1998. Research firm the Aite Group believes Syncada will offer appealing supply chain solutions for global Tier 2 banks, as well as selective Tier 1 banks.
As part of the joint venture, Visa has made a capital investment in Syncada and will provide its experience in building and managing a multi-bank network, as well as marketing, sales and risk management support. US Bank contributed assets – including its technology platform and certain personnel – and will provide expertise in automating general payables/receivables spend, in addition to focused expertise in multiple spend categories, including freight, utility, telecom and global trade payments.
“Syncada is an attempt to leverage the data that Visa and US Bank have regarding both the payable and receivable sides in order to be able to provide trade financing in a way that is done intelligently based on the data that they have. They use the term ‘arbitraging the payables company to be able to do financing for the receivables company’ and I think that is a good term for it,” said Aite Group senior analyst Nancy Atkinson in an interview with gtnews.
Although there remain significant challenges in gaining volumes and acceptance because Syncada has ‘competitors’ in the market, including MasterCard Payments Gateway, JPMorgan Chase, Citigroup, Deutsche Bank/Bottomline Technologies, and BNY Mellon/SourceNet, Atkinson believes that this venture is a significant market changer for two reasons.
On the one hand, it moves Visa beyond being solely a card network to being involved in a much broader supply chain network, including electronic invoices, matching invoices to purchase orders, facilitating the payments and even leading into trade financing, which is unique when compared to other major card players, such as MasterCard, American Express and Discover.
On the other hand, accessing Visa’s global reach and brand recognition will broaden PowerTrack’s reach and US Bank’s trade finance capabilities. US Bank will also benefit from Visa’s expertise and experience in managing a multi-bank network. “That includes things like setting policies and procedures that anyone who chooses to participate agrees to follow. These policies are important because the industry is lacking standards in general, so if there are at least some business rules and agreement, that helps a great deal,” said Atkinson.
Both Visa and US Bank are gearing Syncada towards building volumes as quickly as they can through two approaches. “They would love to get a global non-US player involved, whether a bank in Asia or Europe. Another way to grow, however, is to bring in some regional players that have a strong cash management base,” said Atkinson. “I don’t think they have a mutually exclusive situation but are looking at growing in both directions. Their purpose is to start to build out this network and to build on what they have.”