business and public sectors for increased operational efficiency
and transparency, Citibank has announced the launch of its
electronic payments solution, Citibank Paylink for Cards.
Developed in conjunction with MasterCard, the solution integrates a
purchasing card into the client’s accounts payable system. The aim
of the new system is to both streamline vendor payments made by the
client and distribute end-to-end information to all the involved
parties without manual handling.
Previous payment systems have involved multiple interfaces in the
process, but Paylink for Cards now offers one electronic solution
for all payment options, including commercial cards and electronic
funds transfer. Purchasers can now initiate payments to multiple
payment methods in one fell swoop.
But while the benefits of the Paylink payments solution may be
compelling for buyers, the business case for suppliers is less
obvious. Interchange remains the major obstacle. It will cost a
supplier around $0.15 to $0.20 to process an automated clearing
house transaction, compared to a card transaction which will cost a
percentage of the transaction value – and both will give them the
Judson Murchie, an analyst with Aite Group, points out that the
platform is not yet at a stage where it offers suppliers any
benefits that would offset the costs associated with accepting
large card transactions.
“In the retail space it makes sense for cards to have interchange,
because you don’t know who your customer is,” he told CI. “In
business-to-business payments, that risk is not there so
A supplier has to accept all cards if they are to accept any, but
the challenge is that while card payments may be beneficial for
small or one-time buyers, suppliers stand to lose a significant
percentage of revenue should a strategic buyer want to do business
with a purchasing card.
Murchie believes either the pricing model or the rules that govern
non-discriminatory card acceptance will have to change for the
Paylink solution to penetrate the market.