Visa (San Francisco) and U.S. Bancorp (Minneapolis) have joined together to create Syncada, a financial supply chain network. According to a release, this JV will provide a business-to-business network for corporations and governments to process and track invoices, make and receive payments around the world, and have payables or receivables financed through local and global financial institutions.
Syncada combines Visa's experience in delivering commercial payment services to financial institutions and managing a multi-bank network, with U.S. Bank's PowerTrack, an automated B2B e-invoicing, payment processing and trade finance network. The venture allows financial institutions of all sizes to offer their commercial clients standardized B2B invoice processing, financing and payment services across a variety of payment types and local currencies. Financial institutions can also build transaction and credit-based treasury management business by offering the network's services to buyer and supplier clients.
According to the companies, benefits of the network to buyers and suppliers include lower costs from paper elimination, reduced billing and payment errors, more accurate accounting of spending by category, improved management of working capital and global cash needs access to financing through a global network of financial institutions as new bank participants join, and integration with a proven network using patented technology.
Aite Group senior analyst Nancy Atkinson said in a statement that the partnership is a potential game-changer in that Visa's role is not simply around the payments component, but its experience in managing complex networks.
"Through Syncada, Visa is making a dramatic move beyond commercial card payments for the business-to-business payments market," Atkinson said. "Visa will now be involved in invoicing, payment processing beyond cards and trade financing."
U.S. Bank, meanwhile, is able to further leverage its PowerTrack system and expand its global reach. Atkinson also notes that only J.P. Morgan has capabilities similar to PowerTrack.
That said, Syncada is not without its competitors, noted Atkinson in her comments. In addition to J.P. Morgan, other major players in the financial supply chain space include Deutsche Bank, Citigroup, MasterCard Payments Gateway and The Bank of New York Mellon.
Still, with the lack of standards in this area, Atkinson said uptake in general of electronic invoicing will be slow.
Syncada has already gone live with U.S. Bancorp's legacy PowerTrack network clients.
It will be headquartered in Minneapolis with operations in Chicago, Memphis, Toronto, Mumbai and Brussels. Syncada's day-to-day operations are led by its independent management team.
Furthermore, Visa has made a capital investment in Syncada and will provide its experience in building and managing a multi-bank network, as well as marketing, sales and risk management support. U.S. Bank contributed assets—including its technology platform and certain personnel—and will provide expertise in automating general payables/receivables spend, in addition to focused expertise in multiple spend categories, including freight, utility, telecom and global trade payments.
"This mutual investment demonstrates the parties' strong belief in the opportunities to automate the financial supply chain for companies and their banks worldwide," said Atkinson. "Aite Group believes Syncada will offer appealing supply chain solutions for global tier two banks (and even selective tier one banks). The major challenge for Syncada will be to ensure there is value for companies' payables side as well as the receivables side, and to make that value proposition as well known as the receivables side."