Mastercard has made significant strides in the B2B cross-border payments landscape, launching Mastercard Move Commercial Payments at Sibos in Beijing, China. The B2B cross-border payments sector is currently experiencing rapid transformation, driven by rising customer expectations and a growing market presence. As transaction volumes increase at double-digit rates year-over-year, Mastercard sees an opportunity to expand its role within this sector, which largely consists of banks that have historically dominated B2B payments. With new partnerships established with major players like Citi and Paysend, Mastercard aims to elevate the quality and capabilities of cross-border services, positioning itself as a pivotal infrastructure provider in this evolving market.
The Mastercard Move offering already encompasses a variety of cross-border money movement capabilities as a B2B2X service provider. However, the introduction of Mastercard Move Commercial Payments marks a distinctive shift toward enhancing B2B functionalities, specifically targeting intra and inter-company treasury flows. This product is available around the clock and aims to underpin transaction banking services, which account for 92% of B2B cross-border payments as of 2023. According to Alan Marquard, Executive Vice President at Mastercard, this launch represents the company’s focused approach to addressing trade and treasury payments in major currencies, rather than smaller B2B foreign exchange transactions already covered by Mastercard Move.
The Mastercard Move Commercial Payments initiative also capitalizes on the existing infrastructure provided by Swift, the leading messaging network for banks globally. By using Swift’s established systems, which banks are already familiar with, Mastercard intends to foster smoother integration without introducing radical new protocols. The solution leverages rich data formats and identifiers from the Common Global Implementation Team to enhance the efficiency and transparency of cross-border payments. This method aligns with the broader goals outlined in the Financial Stability Board’s G20 Roadmap, which aims to enhance various parameters of cross-border payments, including transparency and speed, by 2027. The prevailing industry discourse has recently shifted from ambitious overhauls to more attainable improvements in current systems, a strategy that Mastercard supports firmly.
Despite not seeking to reinvent existing payment structures, Mastercard recognizes the challenges banks face, such as transaction failures, concerns about liquidity, and the complexities of managing accounts receivable. Research indicated that mid-market companies in the United States prioritize certainty in their receivables, highlighting the importance of addressing these issues effectively. One of the key components of Mastercard Move Commercial Payments is the innovative approach to addressing the liquidity challenges associated with correspondent banking networks. By allowing for more efficient settlement options through an orchestration-focused solution, Mastercard aims to refine the overall experience for transaction banks and their corporate clients, thereby minimizing inefficiencies, improving liquidity allocation, and enhancing customer satisfaction.
Central to Mastercard’s proposal is the establishment of an orchestration layer, bridging the expectations and data requirements of various stakeholders in cross-border transactions. Marquard emphasized the necessity of creating standardized rules that facilitate better communication among payers and receivers. The orchestration approach is bolstered by Mastercard’s extensive experience in card payments, which equips the company to develop the necessary rules and mechanisms for streamlining cross-border transactions. By incorporating flexible transaction controls and potential pre-validation checks, Mastercard aims to reduce transaction failures and enhance the overall reliability of cross-border payments.
In anticipation of future financial developments, including the rise of digital currencies, Mastercard’s new solution lays the groundwork for integrating these emerging assets into its payment options. In collaboration with the consortium Fnality, Mastercard has explored pilot initiatives that involve digital ledger technology in payment settlements. Such initiatives reflect Mastercard’s commitment to adaptability in a rapidly changing environment. While there is considerable interest in stablecoins and digital currencies within the financial sector, education and understanding around these technologies need to improve among corporate treasurers and transaction banks. Mastercard recognizes that fostering awareness and deploying use cases of digital currencies will be essential for encouraging broader adoption within the industry. Overall, Mastercard is strategically positioned to enhance cross-border payments by focusing on collaboration, leveraging existing standards, and preparing for future innovations in the financial landscape.
