Speaker 0: The Payments Podcast from Bottomline.

Owen McDonald (host): Welcome to the Paymode edition of The Payments Podcast. I'm Bottomline's Managing Editor, Owen McDonald. This series of Paymode-themed podcasts looks at the hottest trends in business payments with Paul McMeekin, Vice President of Marketing at Bottomline, along with expert guests. In this episode, Paul welcomes Rebecca Meeker, Senior Vice President of B2B Partnerships and Embedded Finance at Mastercard. They discuss improving fragmented business payments experiences in a new take on B2B consumerization, be it with embedded finance, virtual card, or other capabilities.

Here's Paul McMeekin and Rebecca Meeker.

Paul McMeekin: Welcome to The Payments Podcast. This my name is Paul McMeeken. I'm your host today, continuing this special Paymode series. And with me today is Rebecca Meeker from Mastercard. Rebecca, welcome to the podcast.

Rebecca Meeker: Thank you very much. Glad to be here.

Paul McMeekin: Rebecca, before we dive into embedded finance today, I would love to know a little bit about you and a little bit about your background.

Rebecca Meeker: Sure. So I've been with Mastercard for almost eight years now, have come from a B2B background, spent about half of my career helping buyers and suppliers get integrated, digitizing POs and invoices. And then, naturally, the back half of my career has been spent helping treasury cash management connect to their banks, mostly on all payment modalities, Swift, ACH... except for card, which I've picked up since I've been at Mastercard the last eight years.

Paul McMeekin: How are you approaching embedded finance at Mastercard?

Rebecca Meeker: So we believe strongly that the payment actually should be part of the workflow for a purchase. So you go to source, you make a procurement, and then you receive the invoices for the services or goods that you've received. And then we feel like in that user journey, the payment belongs there. As opposed to today, in the corporate world, whether you're a large enterprise or even mid-market, payment is a fragmented, disconnected process that happens over off in the corner someplace. And so we think it should be a seamless journey, very similar to what we experience in our consumer lives when we go to buy something.

Paul: What do you guys do for for cross-border payments?

Rebecca Meeker: So Mastercard actually has licensing, and we do offer cross-border payments. We do it for, consumers, people who want to send money back home, but we're also building out in the commercial space as well. We're also building out in capabilities. Usually, these days, when somebody asks about cross-border, they'll also take the natural progression to talk about stablecoins as well, which we're also seeing increased interest on.

Right now, a lot of our focus is around helping financial institutions, banks, or fintechs, actually mentor or redeem and build out their own capabilities. But we are in the digital currency world as well as the cross-border space, non-card payments, seeing the synergy of overlap of the two. Right? So our teams are working on that to build out capabilities for corporations to be able to use overlapped capabilities between our digital currencies card as well as cross-border. At the end of the day, we want a corporation to have the most optimized experience for how to send the payment.

Paul McMeekin: What are some of the most promising use cases you have seen in embedded payments?

Rebecca Meeker: I think the one that everybody is most familiar with is, paying an invoice. So purchase order issued, invoices submitted, it's three-way / 10-way matched. Right? You receive the goods and services that you've purchased and go to pay, and a decision has been made to actually use a card for that particular spend and pay that supplier. That's probably the most obvious one that most of the procure-to-pay networks and ERPs have built out.

But where we're starting to see some creativity is linking virtual cards, not just for credit lines, but also you could say pre-funded or, you know, financed where you can actually put financed excess back on the virtual card - using a virtual card more like a digital asset as opposed to card. Everybody thinks virtual card's still the plastic, with restrictions.

Paul McMeekin: Yeah.

Rebecca Meeker: But in this case, if you can put any kind of capital or funding on that virtual card and you can link it to other use cases, it starts to open up opportunities where you can link it to contracts. Maybe you need to pre-fund and advance funds to somebody. You can do it for, you know, purchase orders. You can now link it to one-time spend. Right? So one-time spend long-tail ad-hoc vendors is 20% of your actual spend, but probably 80% of your FTE workload and process inefficiencies.

Paul McMeekin: Something that you mentioned... 'digital assets', 'one-time use'... it got me thinking about the security angle. If payments get embedded into the non-financial platform, how is the payment kept secure?

Rebecca Meeker: I hate to just anchor on the virtual card and the card piece of it because we do a lot of other things at Mastercard. But, the virtual card does inherently, naturally just provide a lot of security. Right? It's tokenized. Also, when it's embedded, you've removed third party processes, extra people touching the process for manual failures or errors.

So just reduction of people touching it just makes it more secure. There's also security and controls around the card. So you can determine who is using, when are they using it, what time frame are they using it. So if you want to approve Rebecca to only use this card between this day and this day for this amount at this particular merchant, you can lock it down.

So I think a combination of all those just brings more just organic security to the situation.

Paul McMeekin: If I can lock things down and there's a record of all of that sort of stuff, there's an audit trail?

Rebecca Meeker: Yeah. You have an audit trail of of what was done, when it was done. Card just naturally has the line items linked to it. The one thing with non-card payments is that a purchase is made, a payment is made, there's a reference ID linked to the payment. But as it goes through the system and the various clearing houses, all the data is dropped, and you get a reference ID back with the payment amount.

And that's where the reconciliation challenges start to happen because people have to map that reference ID with the payment amount back to what was the originally initiated payment. But with card, because of the messaging formats in the card system, it's just the structure's just naturally there for reconciliation. So not advocating that it's it's the answer for everything, but I think most corporations say they do 3% of their spend on card, and they think there's opportunity to optimize at 15%.

Paul McMeekin: Next question. What do you see the future holding for a bit of finance in the next three to five years?

Rebecca Meeker: I think it just becomes the status quo of how companies start doing things. I mean, there's just a process efficiency, a cost saving, you know, reduction of IT projects every time you want to touch your vendor or master file, every time you want to set up a new payment request. If organizations out there like the procure-to-pay systems, treasury cash management, receivables, ERPs... if they start building in organic capabilities to be able to manage the payment linked to how you're purchasing or how you're being paid to reconcile your receivables, then it just starts reducing some of the effort of companies trying to bring that to life.

Paul McMeekin: That makes sense! And lastly, if you could give one piece of advice about the future payments to CFOs and treasurers, what would it be?

Rebecca Meeker: Start trusting in the technology, trying it, and using it. Also, I think encouraging and providing that atmosphere your for your team and your organization to be able to lift out of firefighting. I mean, let's face it, most individuals in the back office are pretty overburdened, overworked, have a lot on their plate and always firefighting. So giving them the space, occasionally, that they can start looking into ways that they can be more strategic and make improvements to how they're doing their day job, I think, would be very helpful.

Paul McMeekin: Well, thank you, Rebecca.

Rebecca Meeker: Thank you!

Owen McDonald: Pay by invoice, procure to pay, linking virtual cards for new use cases, all while keeping payment security ultra tight. These were just some of the takeaways from this informative episode. A very big thanks to Mastercard's Rebecca Meeker and to co-host Paul McMeekin. To our audience, the smartest people in B2B payments, thanks for listening. Hit subscribe.

Catch us again on your favorite podcast platforms, including Apple, Spotify, iHeartRadio, YouTube, and Blubrry. Bye for now.

Speaker 0: The Payments Podcast, from Bottomline.