Visa Exits Syncada Relationship
This post is co-authored by David Gustin and Jason Busch.
US Bank has bought back the shares of Syncada from Visa and Syncada is being functionalized within US Bank Corporate Payments Group.
Our quick analysis suggests the following:
- Visa was looking for a general payables play, and Syncada’s focus is squarely freight payments. The original idea to leverage the network never materialized. Visa’s investment was predicated on exploiting the B2B world, not freight logistics.
- The JV has not really leveraged Visa’s procurement card offering.
- In 2012, Syncada processed more than $21 billion in payments and millions of invoices and trade documents. The lion’s share of this business was freight payables, and was supported by two main banks – U.S. Bank and Citibank.
We look forward to sharing more about the news as it becomes available. The e-invoicing, payments, and trade finance world is likely to get significantly more attention in the remainder of 2013 and 2014 for a variety of reasons, not the least of which is the maturity of bank and solution provider offerings, gained from decades of “lessons learned” such as this. But other market dynamics are at play as well, including:
- The linkages of banking products (and bank capital) with a new breed of provider solutions (e.g., part of the vision behind the Tungsten and OB10 combination)
- Increasing adoption of software products that could serve as a gateway to the adoption of trade / receivables financing (e.g., material early uptake of the Taulia discounting, supplier portal, and e-invoicing solution within a number of SAP’s larger accounts)
- The delta between the cost of capital (and the availability of capital through traditional lending means) for small and middle market businesses (SMBs) and Global 2000 companies – leading to new funding mechanisms, intermediaries, and general opportunity
- Increasing global “data exhaust” as a result of both invoicing regulatory requirements in specific regions (e.g., Brazil, Argentina, Mexico) as well as the general uptake of electronic forms of document exchange (outside of actual payments); information gleaned from these transactions such as system command for approval to pay a specific amount of an invoice can help lower the risk for those financing the payment of transactions
- Significant, double-digit growth of cards in the corporate environment in the past two years, including the “foot in the door” this provides to issuers
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