Traxpay Raises $15 Million – Will Better Payment Models Transform P2P and Trade Financing?

Earlier today, Traxpay announced it had raised $15 million from a set of financial and strategic investors, including Commerzbank. In the coming weeks on Spend Matters, we’ll be featuring a detailed interview I recently had with Traxpay CEO John Bruggeman, whom I’ve known for nearly 15 years (long before we both got into this sector). Traxpay is a truly fascinating, yet early stage vendor focused on the dynamic payments space. It is not a competitor to the Ariba/SAP, Basware, Tungsten and Taulia type providers of the world, but rather a potential partner (for a variety of reasons). It is, however, a serious threat to banks and potentially to card companies as well (which likely explains why Mastercard is partnering with it – also announced today).

Here are some of the highlights from the announcement (with marketing hyperbole edited out):

  • The “oversubscribed round was led by ... [the] corporate incubator of Commerzbank (XETRA: CBK), and Software AG (XETRA: SOW) with existing investors Earlybird Venture Capital and former senior APAX partner, Michael Phillips of Castik Capital Partners, also participated in the round”
  • “Traxpay’s B2B Dynamic Payments platform … consists of a … cloud-based runtime and development environment and … suite of integrated B2B payment capabilities, as well as a central gateway to critical value-added financial services … Traxpay provides supply chains with … new integrated tools such as supply chain financing, factoring and dynamic discounting that will enable them to better predict and optimize their business.

David Gustin and I previously covered and explained the concept behind Traxpay on Spend Matters PRO (see: The Holy Trinity that Makes Traxpay Connect Networks with Payments). In framing the challenge that Traxpay is trying to solve, which is actually far more complicated than many, even in procurement, treasury and AP are aware of, we note:

Many of us have sent money cross border, using banks, and find that once we initiate a wire, it becomes a big black hole as to when and how much your beneficiary of the wire will receive. There may be multiple correspondent banks, each taking out their fees, so the end result is that the funds sent do not equal the funds. And besides the obvious problem of not knowing how much money will be lost along the way, the tracking of payments can also be a nightmare.

Well, now think about this problem in the B2B world. For example, consider when a supplier submits an invoice to a buyer. An invoice is nothing more than a request for payment based on some purchase order (or not). When we navigate to the B2B commerce world, we find a new set of intermediary networks are increasingly playing in this space.

“Traxpay enables structured (e.g., invoice, purchase order) and unstructured data (e.g., photos, PDFs, etc.) to travel between buyers and sellers to make and reconcile payments in a dynamic fashion. Their platform does this by offering three main propositions.”

The full research brief explains in detail what these three elements are and how they work together (hint: 1) a core banking system/platform; 2) secure B2B transaction layer; 3) payment platform as a service (PaaS) model). There’s nothing simple about it. But to begin, think of Traxpay as a bank replacement – a true virtual bank with backing physical infrastructure for authorizing and managing payments – and a new type of network and platform in one.

The Spend Matters hat goes off to the Traxpay team for closing the round and joining forces with Mastercard. Payments is a sector that must be disrupted for eProcurement, e-invoicing, supplier networks and trade financing to take their next big leap forward.

Spend Matters PRO subscribers can learn more about the Traxpay model here: The Holy Trinity that Makes Traxpay Connect Networks with Payments

See also Trade Financing Matters coverage: In Focus – Traxpay gets funded to disrupt B2B payments


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