The theme of ‘convergence’ keeps popping up across the various solutions that make up key components of the financial cash cycle. We have written about the continued trend towards a more seamless, digital process across financial systems processing, most recently in a report titled Procure-to-Pay Convergence: Market Review and Vendor Comparison. The piece referenced in this article appears in TechTarget and discusses the announced partnership describing just such a scenario, between SAP Ariba and American Express.

‘The SAP Ariba and American Express partnership could help end that disruption, according to Sean Thompson, senior vice president of the SAP Ariba business network…..”We want to make it easier for companies to pay companies, and we realized that the SAP Ariba Network value proposition has to be something that allows for efficiency of business-to-business commerce,” Thompson said. “Historically, the SAP Ariba Network has been about purchase orders and invoices; we want to make it about purchase orders, invoices and payments.” ‘

In effect, due to the latest tech usages of APIs, there is an ability to create platform experiences with background partnerships between fintechs as well as between FIs and fintechs. As a result, B2B networks can more easily connect to potentially missing tools, such as complete access to all B2B payment types. In this particular case, Amex is integrating their virtual card technology with SAP Ariba, creating a possible STP scenario. The buyer-initiated virtual card payment, which is in effect delivered via tokens, allows for a single use digital payment that can be used to pay and settle with multiple invoices, providing a scenario whereby human intervention can be eliminated from payables (and potentially reconciliation) under approved circumstances. Virtual cards (tokenized) provide safety on both sides of the transaction being PCI compliant, and also apply to specific amounts for a defined period only.

‘E-Bai Koo, executive vice president of global commercial services at American Express, said buyers and suppliers will realize several benefits from the service….Virtual tokens also provide more flexibility in how payments are made, Koo said. Today, businesses generally provide a credit card number to a supplier, which can then be charged for multiple things and sometimes create headaches for them. For example, disputes can arise if a supplier splits an order and only half the items are shipped, but the whole invoice is charged. The virtual token ensures buyers will pay only for the items that ship….”The virtual token can be issued at the invoice level or, if you issue it, at the aggregate level when there’s custom detail that you can add for different invoices,” Koo said. “So, that will make life easier for both buyers and suppliers.”  ‘

We’ll continue to highlight where this trend is moving.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group