Buyers and suppliers have been trying to expedite B2B payments for decades.

It’s not an easy task: they both struggled with the basics to make payments faster, and the paper check proved surprisingly sticky.

Only in the past few years have we seen partial adoption of buy now, pay later (BNPL), virtual cards, and dynamic discounts in the space.

“All of these past attempts to speed up payments required approval first,” said Ron Shultz, executive vice president of new payment flows at Mastercard.

He told Karen Webster of PYMNTS that “big companies are just relatively slow when it comes to matching purchase orders, bills of lading and invoices and sending them to different departments and getting them approved” .

Small suppliers, in particular, have paid the price. In a world where improvement has meant they have been paid in 45 days, on average – better than the 60+ days that have been common practice, but not enough to prevent small and medium enterprises (SMEs) from d have money flow crunch.

Indeed, not too long ago, PYMNTS estimated that up to $3.1 trillion was tied up in accounts receivable, in the United States alone, every day.

To help address these issues, the payments network last week announced the launch of Mastercard Track Instant Pay, a virtual card solution for instant B2B payments.

Read more: Mastercard launches instant B2B payments

The solution integrates with Mastercard Track Business Payment Service, Mastercard’s open-loop B2B network, and leverages existing buyer credit lines to help suppliers get paid faster.

Offering virtual cards can expedite B2B payments by avoiding the friction inherent in automated clearing house and other methods. The solution helps solve a problem that is also disrupting digital payments, where 90% of virtual card transactions are still processed manually.

With straight-through processing, digital payments are sent securely to a supplier’s bank account via a virtual Mastercard, without any manual intervention.

Shultz said Mastercard Track Instant Pay has been in the works for a few years – and noted that the solution is a true innovation that links artificial intelligence (AI) to Mastercard’s virtual card platform, ensuring that payment providers small and medium size are paid instantly.

The new Mastercard offering, Shultz explained, uses buyer data and machine learning to intelligently and securely authorize invoices for immediate payment when a vendor submits an invoice, ensuring vendors are paid within days and fostering connectivity between businesses that simply did not exist in the past.

“This program is really designed for medium and small-sized providers,” he said.

Instant payment mechanisms

Shultz noted that buyers who are already part of the company’s B2B payment network and have an unused line of credit with issuers can opt into the instant payment service.

Thanks to Track, he said, Mastercard supports all rails and payment types from buyers, including ACH, and so it can take several days for the payment to go from buyer to buyer. transmitter. Mastercard, for its part, leverages Previse’s machine learning capabilities to calculate vendor performance risk, effectively, the likelihood that the invoice was accurate and that goods and services were delivered as described.

“And then we authorize invoices in the buyer’s name for immediate payment,” said Shultz, who added that the buyer benefits from the additional time granted by the line of credit linked to his virtual card program.

Suppliers, he said, benefit by receiving the buyer’s offer to get paid immediately, simply by signing up and accepting the virtual card for payment. If the vendor does not accept cards, they can be onboarded through Mastercard’s vendor enablement programs.

Pilot programs already in place show that suppliers are paid within days, when they typically have to juggle 44 days of floating.

Build deeper connections between buyers and suppliers

Looking ahead, there’s a logical connection between Mastercard Instant Payments and the Mastercard Track Vendor Directory the company is building for its partners (which in turn can lead them to Instant Payments).

B2B instant payments are being rolled out in a go-to-market phase, open to all Mastercard partners, Shultz said, while cataloging their preferences for future use.

Along the way, we’re likely to see a cemented affinity between buyers and suppliers, where faster access to cash should go a long way to easing the pain of small businesses, especially in a rising rate environment.

Smaller suppliers will be able to replenish inventory or grow their business more efficiently — a potential boon for businesses like restaurants and liquor stores that typically have to pay on delivery.

Mastercard, in turn, may use the data it collects from the Service to better optimize vendor acceptance preferences for businesses while helping them become more efficient in how they charge for goods and services. Scale should come quickly, Shultz predicted, because Mastercard already has the building blocks in place.

“You take advantage of existing assets and bring them together. It’s innovation,” he told Webster. “It doesn’t have to be a whole new rocket.”

Mastercard Track Instant Pay, he said, “serves so many purposes.”

See also: How SMEs can manage late payments – before they happen

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NEW PYMNTS DATA: 70% OF BNPL USERS USE BANK PAYMENT OPTIONS, IF AVAILABLE

On: Seventy percent of BNPL users say they would prefer to use the installment plans offered by their banks – if only they were made available. PYMNTS’ Banking On Buy Now, Pay Later: Installment Payments and the Untapped Opportunity of FIssurveyed over 2,200 US consumers to better understand how consumers view banks as BNPL providers in a sea of ​​BNPL pure-players.