MasterCard wants to automate the business-to-business purchasing-payment process, which is largely based on manually processed paper purchase orders, invoices, and checks. The annual cost of doing it that way at the average billion-dollar-corporation: $30 million.
So the credit-card company has unrolled MasterCard e-P3, a new B-to-B payment program that integrates its existing purchasing card program--which is now used only for small-ticket purchases, not for large transactions--with electronic invoicing programs. Buyers install an e-P3 adapter, which is based on an E-payment platform from Xign Corp., in their back-end accounts-payable and purchasing systems. They can then post purchase orders on a closed Internet site. Suppliers can respond by either automatically reformatting the electronic order into an invoice, fill in a standard invoice offered by MasterCard, or upload a file of any format from their back-end systems. Business rules allow the MasterCard system to bounce back any unsatisfactory invoices to the supplier before even passing them to the buyer.
Once invoices pass the automated inspection, they're E-mailed to the appropriate party on the buyer side, who authorizes the payment on a MasterCard corporate purchasing card. Online collaboration tools let buyers communicate about any disputes or clarifications on purchase orders and invoices. The e-P3 also integrates with supply-chain systems from vendors like Commerce One and Ariba Inc. to add payment processing to supply-chain relationships.
MasterCard is betting that the system will encourage customers to use their corporate cards more, giving it more of the $32 trillion B-to-B purchasing market, says Phil Philliou, VP of E-business and emerging technologies at MasterCard. "Today, commercial cards capture 1% of that market, though it's the fastest-growing card product," he says. "What we aim to do with e-P3 is dramatically increase interest in MasterCard purchasing cards and increase the transaction sizes, as we have increased security and management controls."
Memorial Sloan-Kettering Cancer Institute in New York is an early adopter. Member banks such as J.P.Morgan Chase & Co. and Citibank are selling the product, which costs about $50,000 to install plus what is described only as a "nominal" document-transaction fee.