November 4, 2013
B2B transactions present tons of issues and therefore opportunities to innovate. A US/Germany based startup Traxpay, seeks to capture a share of nearly $250 billion B2B payments market that is majorly handled by banks by providing unique blend of payments, enterprise software and banking expertise.
Traxpay says that it provides the following advantages over traditional banks:
Traditional banks charge significant fees for faster payments whereas Traxpay platform provides B2B transactions free of charge for both the sender and the receiver.
Traditional payments methods are incapable of supporting data or limit valuable information to 140 characters whereas Traxpay helps to connect the payment and the information together – whether structured or unstructured and in any multi-media format – enabling faster settlement and reconciliation of payment exceptions.
Transactions which are made through traditional payment methods generally take 2-5 days before a recipient has access to the funds and even longer for cross border transactions, slowing down the entire business cycle. With help of Traxpay, funds are transferred in real-time – even after banking hours, on weekends and holidays – and the funds are available immediately.
Traxpay was founded in 2009 and is headquartered in Mountain View, California, with an R & D office in Cologne, Germany. The company received an initial funding of $4Mn through Earlybird Venture Capital. Through these funds, Traxpay is building out its business in Europe and will start its expansion in the U.S. It has developed the service in partnership with SAP, Accenture and NTT Docomo.
Traxpay says that it provides real-time, 24/7 transactions and trusted trade. It seeks to make settlement fast and simple by connecting full, rich data with each payment. Traxpay targets the market segment through two different editions of its product –
· Traxpay B2B Payments professional edition (for small to mid-sized companies) and
· Traxpay B2B Payments Enterprise edition (for large mid-sized and global organizations).
The solution provides support to companies for integrating their ERP systems with Traxpay products for better management of payments. It enables customers to safely and securely accelerate and optimize cash flows, working capital and liquidity with incomparable visibility and control. Watch their video
Traxpay provides an instant real-time payment capability, which allows our customers to instantaneously settle financial transactions with the click of a button said Stefan Grimm, Head of sales, Restposten’s.
One of the challenges for Traxpay would be changing consumer behaviour as today they are dependent on traditional medium of payments like Cash and cheque. Traxpay would also need to do seamless integration. Companies don’t want a new system that requires changes to their current infrastructure and systems as they have concerns over cost, training, downtime, etc. According to a 2010 Federal Reserve Payments Study, 64% of U.S. corporations still use cheques as their payment vehicle, which is staggering. Another challenge is to expand both geographically and adding functionalities demanded by its customers like dynamic discounting and cash auctioning etc.
Some of the competitors in the field include Fundtech, GoCardless and Bottomline. GoCardless a UK based payment firm works with SMB’s to accept direct debit payments and solve their late payment woes that affect cash flows. Fundtech claims to develop transaction banking solutions that automate activities like cash management, payments, settlement, liquidity management and the financial supply chain. Its line of products and services for business include Remote Deposit Capture, SWIFT for Corporates, payments, Merchant Services and electronic invoice presentment.
LTP View: Traxpay is addressing gaps in B2B financial transactions and driving innovation in an area replete with issues and changes. As future of this industr like many others lies in making transactions faster, online, safer and smarter, these dimensions would form the agenda for innovation.