Mastercard has partnered with British financial technology firm Demica to provide supply chain finance to its business clients, demonstrating continued strong demand for loan products after the collapse of Greensill Capital.
Mastercard announced Thursday that it will launch a new supply chain financial product with Demica based on the technology platform that banks use to track invoices that support this form of financing.
Mastercard is best known for the credit card network that connects consumers and businesses, but the $ 352 billion payments company offers financial products through the Track Business Payment Service, a unit that facilitates transactions between businesses. increase.
Mastercard’s Chief Product Officer, Craig Vosburg, refused to reveal the program’s revenue goals, but with a $ 125 trillion annual payment flow, the potential market for this product is “huge.” I explained that there is.
“It’s not just years, it’s an opportunity for decades of growth,” Bosberg told the Financial Times.
Supply chain finance Is the process by which a financial institution pays an invoice to a supplier, where the supplier accepts less than the full amount in exchange for a quicker payment. While big banks offer well-established financial products to corporate clients, the pesky elucidation of supply chain finance specialist Greensill Capital earlier this year can be used to flatten and distort a company’s balance sheet. Attracted attention to the method.
Demika’s CEO Matt Leford said the collapse of Greensil “had no impact” on the wider market. He added that the partnership with Mastercard will allow smaller suppliers to profit from the product and set the cost of accepting it.
“It’s supplier-centric … it basically cuts all the abilities that cause bad acting,” Wreford said. “This is to support the real economy, not balance sheet engineering.”
The program will be funded by major banks such as HSBC, which are already using the UK company’s platform.
Greensill Capital said it was the UK’s most valuable financial tech company, but its collapse led to third-party software platforms such as Demica’s rival Tauria backed by investment bank JP Morgan and insurance company Pin Anne. The great dependence of the group was revealed. Recent report from Greensill’s Admin Grant Thornton “We couldn’t realize the value” of the group’s software, he said.
According to the minutes of the December 2020 meeting released by the Financial Conduct Authority, the company’s founder, Lex Greensill, once said MasterCard would invest in the business that bears his name. Told the regulator.
Vosburg declined to specifically comment on whether the company had considered investing in Greensill Capital.
“We are always looking at and discussing companies across the ecosystem and carefully considering their strategy, business model and values,” he says. .. “We make decisions about where and with whom to partner, and in some cases invest accordingly.”
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