Coupa Goes to School on Ariba Pay, Introduces MasterCard Payment Partnership

Ariba and Discover may be a number of years ahead in rolling out an integrated P2P and payments solutions, but Coupa is learning fast – and has taken its first steps, with MasterCard, to build a set of capabilities on top of MasterCard’s rails, starting first with a simple early pay solution that leverage a ghost card infrastructure.

Specifically, at Coupa Inspire this week, MasterCard and Coupa announced its partnership with MasterCard’s Commercial Products and Enterprise Partnerships division (along with development/banking partner Silicon Valley Bank) to develop an integrated payments capability (which today is essentially limited to integrated ghost card capability in the Coupa platform – but could quickly grow to something more tomorrow).

According to the announcement, “The first joint service to be deployed is a MasterCard In Control for Commercial Payments virtual card payment solution embedded within the Coupa Procure to Pay platform. The integrated offering will allow millions of businesses that accept MasterCard to get their invoices paid faster without negatively impacting their customer’s cash position.”

That last line is actually quite humorous if you dissect it a bit given the 2%-3% fees typically associated with card programs that come right off the top of an invoice – equivalent invoice discounting programs with providers such as Tungsten and Taulia are typically significantly less (even when supported with third-party capital avoiding any balance sheet impact for buyers).

Yet cards do have their advantage from a data capture standpoint. As noted in the announcement, “With MasterCard's virtual card technology seamlessly embedded within Coupa's solution, buyers can automatically issue payment upon transaction approval, delivering a streamlined, highly secure invoice-to-pay process with rich remittance detail.”

Ghost card programs no doubt have their place. But B2B payments is a world entirely different and unto itself than P2P – and ghost cards can only solve for a piece of it (at least cost effectively). Yet kudos to Coupa and MasterCard for taking a first step together past the integrated starting line.

But it will be far more interesting to see what the 2 come up with a mile or so down the payments and P2P race course as third-party capital-based invoice discounting, supply chain finance and related programs come together with greater payments visibility for procurement and suppliers alike. This a chasm in the financial supply chain that is generally a black hole in an end-to-end P2P process where rays of light shine nearly everywhere else from a visibility perspective.

Finally, it is important to note that the ghost card approach that Coupa and MasterCard are taking is not overly new or novel – and hasn't been proven hugely successful in the market. But, choice is a good thing, and there is nothing wrong with it if they can get it implemented at their clients. In contrast, Ariba Pay is different because suppliers don't have to be already signed up with the p-card issuing bank. Of course, Ariba Pay hasn't really overly successful from a share/penetration of payment perspective yet beyond its T-Mobile implementation. But it is something truly "new" in contrast to the initial program from Coupa and MasterCard.

At Spend Matters and Trade Financing Matters, we’ll be watching closely to see what comes of this new partnership with MasterCard, especially as the ghost card program evolves into what we hope will be something more. Stay tuned!


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