American Express' rumored acquisition of Harbor Payments is great validation for the nascent EIPP market. And it also shows the sector is up for grabs, with many hands jockeying for position to capture dollars from it. One group with a strong position to lay claims to EIPP gold are software providers such as Xign and Ariba who position the sector as a logical application bolt on -- obviously with improved business processes baked in as well -- to procurement suites and A/P modules within ERP (Harbor was in this camp as well before the Amex deal). Another segment of the market are banks and financial institutions -- like American Express -- who can also logically offer solutions that streamline the invoicing and payables function as well, often targeting the treasury function who they already serve. This financial EIPP ecosystem also includes more focused supply chain finance providers such as Prime Revenue who sell direct to banking institutions. These types of capabilities take dynamic discounting offerings of broader EIPP providers a step further by allowing banks to capture a share of the early payment spread.
So who will win the EIPP race? Besides customers -- for whom EIPP should be a no brainer -- it's too early to say. I doubt, though, that we'll see too many best of breed providers survive on their own for long. One reader emailed me this morning that he thought that it might make sense for JP Morgan Chase to pick up Xign (given their Vastera acquisition, the concept is not that far fetched). But I could just as easily argue that the real opportunity here is transforming A/P rather than simply focusing on the finance component of EIPP (which is where the banks and financial institutions are most interested). And in that case, it's more of a software and business process opportunity than just a financial services one. Only time will tell, but regardless, American Express’ move will certainly get others in the market thinking about their next steps as well.