U.S. Bancorp, Visa launch online payment processing business
Updated: 07/29/2009 04:11:32 PM CDT
Minneapolis-based U.S. Bancorp and payment giant Visa have launched a new company that will be based in the Twin Cities.
The two companies said today they've partnered to create a Syncada - a standalone LLC that will use a global network of banks to electronically track invoices, process payments and finance inventory for corporations and governments that do business all over the world.
"I'd say this is an online bill payment tool for businesses," said Rick Langer, chief operating officer of Syncada, adding that much of corporate bill-paying today is done on paper.
U.S. Bancorp contributed its technology and 550 employees to the new company. Visa made an undisclosed capital investment in Syncada.
For now, Syncada is housed at U.S. Bancorp's downtown Minneapolis headquarters, but it will move into its own space soon, executives said. Syncada's board is evenly comprised of Visa and U.S. Bancorp officials.
U.S. Bancorp has offered online bill pay for its commercial customers for some time through a service the bank called PowerTrack.
"We invested in this business back in 1997 and we did our first transaction in 1998," said Rob Abele, president of U.S. Bank Corporate Payment Systems. "We've been successful in growing that business handsomely, but now we're reaching the point where we have more and more multinational customers asking for that solution outside U.S. borders."
But because U.S. Bancorp isn't licensed to do business all over the world, it'Sbeen limited in where it can provide those services to customers. By partnering with Visa, which has the experience and clout to assemble the global network of banks needed to make Syncada work, U.S. Bancorp can extend its reach.
"Whenever you are trying to do something like this ... you have to get enough banks involved and enough parties willing to work with those banks to make this work," said Nancy Atkinson, a senior analyst at Boston-based research firm Aite Group.
Visa's name and experience will go a long way toward building a strong network, Atkinson said, but there will be challenges - namely a handful of "competitors" that offer various aspects of what Syncada aims to sell. "One of the problems is there is no industry standard for any of this," she said.
Nicole Garrison-Sprenger can be reached at (651) 228-5580.
Official Press Release
Visa and U.S. Bank Launch Syncada – a Global Financial Supply Chain Network
Visa Inc. (NYSE: V) and U.S. Bank, the lead bank of U.S. Bancorp (NYSE: USB), today announced the creation of Syncada – a joint venture that provides a business-to-business (B2B) network for corporations and governments to process and track invoices, make and receive payments around the world, and have payables or receivables financed through local and global financial institutions.
Syncada is unlike any other network in that it combines Visa’s proven experience in delivering commercial payment services to financial institutions and managing a multi-bank network, with U.S. Bank’s PowerTrack, an automated B2B e-invoicing, payment processing and trade finance network. The venture allows financial institutions of all sizes to offer their commercial clients standardized B2B invoice processing, financing and payment services across a variety of payment types and local currencies. Financial institutions can also build transaction and credit-based treasury management business by offering the network’s services to buyer and supplier clients.
Syncada extends the vision of both Visa and U.S. Bank to provide companies and governments a more efficient way to pay and be paid by replacing inefficient, paper-based B2B processes with an integrated, fully electronic financial supply chain platform.
Participants in Syncada’s network of buyers and suppliers can benefit from:
Syncada has begun operations and initially serves U.S. Bank and its legacy client base from the PowerTrack network, which serves hundreds of customers, interacts with thousands of suppliers, and processed over $18 billion in invoices in 2008. U.S. Bank will continue to work with its customers uninterrupted through the Syncada network.
"Syncada complements Visa’s core payments business by expanding our capabilities in B2B supply chain management,” said Joseph W. Saunders, Chairman and CEO of Visa Inc. "By investing in this leading platform, we can offer Visa’s financial institution clients around the world access to Syncada’s services, backed by a comprehensive sales and support infrastructure that will help extend the reach and capabilities of Visa’s commercial product suite.”
"U.S. Bank’s stature in the payments business was built by decades of investment to create a powerful and efficient payment service for corporations and government institutions. PowerTrack has been key to our success in payments, and in attracting new commercial banking clients,” said Richard K. Davis, Chairman, President and CEO of U.S. Bancorp. "Taking what we built in PowerTrack, combining it with Visa’s deep experience in building a multi-bank network and transforming it into Syncada will enable the network to grow by expanding the offering to new partners around the globe. We’re proud to be an investor in Syncada, to be its first customer, and to continue to serve our U.S. Bank clients through the new entity.”
As part of the joint venture, Visa has made a capital investment in Syncada and will provide its experience in building and managing a multi-bank network, as well as marketing, sales and risk management support. U.S. Bank contributed assets – including its technology platform and certain personnel – and will provide expertise in automating general payables/receivables spend, in addition to focused expertise in multiple spend categories, including freight, utility, telecom and global trade payments.
Syncada will be headquartered in Minneapolis with operations in Chicago, Memphis, Toronto, Mumbai and Brussels. Syncada’s day-to-day operations are led by its independent management team.
About Visa Inc.: Visa Inc. operates the world's largest retail electronic payments network providing processing services and payment product platforms. This includes consumer credit, debit, prepaid and commercial payments, which are offered under the Visa, Visa Electron, Interlink and PLUS brands. Visa enjoys unsurpassed acceptance around the world, and Visa/PLUS is one of the world's largest global ATM networks, offering cash access in local currency in more than 170 countries. For more information, visit www.corporate.visa.com.
About U.S. Bancorp: U.S. Bancorp (NYSE: USB), with $266 billion in assets, is the parent company of U.S. Bank, the 6th-largest commercial bank in the United States. The company operates 2,850 banking offices and 5,173 ATMs in 24 states and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. Visit U.S. Bancorp on the web at usbank.com.