Barclaycard Partnership with Coupa Pay – P2P Becomes P&P

Following the recent announcement that Barclaycard has partnered with Coupa Pay (part of Coupa’s business spend management [BSM] suite) we talked to Barclaycard to more fully understand how the partnership works and what the benefits are for both. We spoke with the knowledgeable Rob Tuckwell, Director of Partnerships & B2B at Barclaycard Commercial Payments.

The first important thing he noted, before we got into the interview, was that we are not to confuse this with P-cards. This is a Virtual card payment solution (V-cards). The P-card, like a charge card, allows the procurement of goods and services without using the traditional purchasing process; the V-card is an electronic (or virtual) allocation of a card number per transaction, not per person, allowing greater control and reconciliation benefits.

The press release describes the relationship as a “Coupa Pay with Barclaycard offering commencing with virtual cards that create a fast, secure, and convenient way for businesses to manage payments as part of their broader business spend management strategy,” so we asked:

“Commencing with …?” Does that mean there might be more to come? …

… What’s the Barclaycard strategy here? we asked. ‘At present, we have no other partnerships with P2P-style software platforms' Rob said. ‘That’s not to say the Coupa deal was intended, on either side, to be exclusive, but we are the first card issuer to work with Coupa Pay.”

This move could of course be an ‘enticer’ for other banks or credit card issuers to get involved in Coupa Pay, because the transaction volumes and values could become significant. Barclaycard’s aim is to embed its payment solutions anywhere its customers are spending, so that might include other systems -- but its first P2P technology partnership is with Coupa. Quite a landmark.

From an international perspective Barclaycard can help its customers make payments in over 100 countries and in 9 currencies but it needs to contract with customers through a UK entity, which the majority of Coupa customers have. Coupa is a global platform with subsidiaries in the US, Europe and Asia.

'Virtual cards are just one solution in the CoupaPay stable that also includes Supply Chain Finance and Dynamic discounting’ he continued, ‘and as Barclays has implemented Coupa as its chosen P2P platform, we have faith in them, and we trust them.’

How does the offering work?

In the Coupa system, a user submits a purchase requisition and once approved a PO is generated, at the same time Barclaycard generates a unique virtual card number (for the one-off transaction) which is funded for the exact transaction amount. Once generated the card is securely transmitted to the supplier. After the transaction the Coupa platform automatically reconciles the charges and statements back to the PO.

‘This is a much more efficient way of dealing with high-volume, low-value, and one-off suppliers,’ explained Rob. ‘It means the supplier can be paid at the point of delivery which is much earlier in their invoice cycle than traditional payment methods. Suppliers will no longer suffer from late payments or extended payment terms helping them confidently forecast their cash flow. It also means suppliers can manage their exposure to bad debt as they are paid by Barclaycard irrespective of the financial strength of their customers. Payment by card reflects the increasing consumerisation of B2B payments and where partners like Amazon Business also operate.’

How does it integrate with Coupa?

Prior to this partnership, the P2P system was used to manage the spend management process, but to make payment users had to come out of the Coupa environment and either log onto Precisionpay (Barclaycard’s virtual card system) or batch payments up to be paid by BACS via their bank partners. So the big difference now, and key benefit to Coupa users, is that you can remain inside the Coupa platform for the whole purchasing and payment process. As soon as a purchase is approved, a card is generated (via an API) and sent to the user, or straight to the supplier, via an encrypted email. When the charge comes through, the transaction shows as complete within the Coupa platform.

In addition, the card statement, which is normally provided separately by Barclaycard, is shown as an invoice within the Coupa platform and all the individual card transactions are reconciled against this invoice. Coupa then leverages the Finance system integrations already built, providing further productivity gains.

For the end user they can see that a card has been generated, sent, charged (or not) all within Coupa. Once the order has been delivered or fulfilled, the PO and invoice is shown as ‘pre-paid’ to avoid a second payment being made within the Accounts Payable department.

The supplier benefits are clear - what about user benefits?

‘Clearly, finance workloads are reduced, and the business benefits from greater efficiency, transparency and control, through connectivity. The amount of money authorised is exactly that needed to pay the supplier, so compliance is stricter and control tighter. A preset timeframe for payment to be concluded means there is less opportunity for fraudulent activity.’

Compliance is a hot topic at the moment, especially in the UK and Europe, in light of Brexit, EU regulations, international banking regulations like open banking and PSD2, so this is an attractive option for those transacting in the region. In the case of using CoupaPay to pay ad hoc or one-off suppliers the major benefit is that buyers don’t have to carry out much of the administration associated with the new supplier set-up process. ‘It can take hours to set up each new supplier; carrying out due diligence and background checks on potential suppliers can be a manual and time-consuming process that normally falls to procurement, finance or both’ Rob says. ‘With payment by card this due diligence is completed by the supplier’s acquiring bank. There is a global network of millions of businesses where buyers can trust that the due diligence has been completed and have all signed up to a standard set of terms and conditions.’ It’s a trusted network and it all adds up to better supply chain relationships.

And the benefits to Barclaycard?

Of course this is a commercial relationship – there has to be mutual benefit.

Suppliers pay a Merchant Service Fee (MSC) to accept payment by either Visa or MasterCard (typically 2% but the amount is volume-dependent, a smaller business might be paying as much as 3%). The MSC is shared between the issuer, acquiring bank and scheme. Barclays is unique in that it wholly owns both an acquiring business and an issuing business.

Integrating payment solutions is not an entirely new model for Barclaycard; it is well documented that they were a launch partner with Amazon Business in 2017. ‘We are keen to partner and understand B2B buyer and supplier behaviour,’ said Rob. ‘Our strategy is to integrate our commercial payment products into the B2B ecosystems that all our customers choose to use, but we have to prioritise the platforms with the most traffic.’

Coupa’s Business Spend Management platform, it would seem, is the first to adopt this new system with Barclaycard. The true test will be how many Coupa users want to use this option, and for how much of the total third-party spend that goes through the platform. But for those who do, it has potential to transform the purchase-to-pay process into one of purchase-and-pay.


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