MSTS’ Brandon Spear on credit as as service: ‘Find a way to solve payments painpoints and you’ll create a real advocate inside a business’

While it may lack the sexiness found in the consumer space, B2B payments are experiencing their own form of transformation. With complicated buying cycles and the complexity of getting different silos, organizations, and companies to communicate with one other, B2B payments still run years behind where we are in the consumer space.

MSTS is attempting to change that. The B2B payments firm provides a credit as a service program to large firms like Best Buy, but to get there, the company first needs to solve some of the painpoints in the sales cycle. President Brandon Spear joins us on the podcast to define credit as a service and discuss what's driving growth in the space. We chat about the challenges of running a credit as a service program and some examples of how clients are working with his company.

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The following excerpts were edited for clarity.

The move to B2B credit as a service

We focus on the business to business transaction. One of our key tenets is to remove the friction that exists in B2B. We focus on the seller by providing a set of tools to the seller. For example, the friction could come in managing different payment terms, disbursement terms, and billing frequencies. One of the biggest challenges sellers face is getting all the information correct on an invoice -- from price to purchase control information. If you can solve these problems and deal with a buyer the way they want to be dealt with, you can see significant growth.

Our technology platform handles this. Sellers essentially outsource all the accounts receivable activity -- we do all the invoicing, billing, collections, and we provide the working capital. It becomes a turnkey offering that we feel helps sellers sell more to their buyers.

How Best Buy uses MSTS for payments and credit as a service

One of our customers is Best Buy for Business. Several years ago, the company built a B2B channel and focused on vertical markets. One market is school districts, which have lots of considerations about how they spend their money on technology assets. We helped construct a solution for Best Buy to put relationship pricing in place and to make it available whether a school district went into a store, phones a sales person or went to Best Buy's website.

A school district representative can walk into any Best Buy with a piece of plastic that looks like a credit card, identifying them and their school district. They can swipe this card to buy a replacement Chrome Book, for example, and enjoy their special pricing in real time at the point of sale. We can also add the purchase order number and keep track of the school district's budget.

The importance of solving B2B payments if you want to lend to them

We generally work with the types of suppliers that represent 80 percent of buyers' spend. Part of our proposition is that there has to be meaningful enough volume that the buyer is interested in controlling the spend and wants to have some type of negotiation around pricing. When you're in this bucket of suppliers, you have to solve some of these procurement challenges.

Supplying working capital to the B2B payment transaction

In this Best Buy case, we do supply working capital. We fund these transactions and provide lines of credit to their customer base. We spend a lot of time and energy to do this in a fast and slick way, so that we gather a minimal number of data points from a prospective buyer. If this happens online, we can provide a line of credit in less than 30 seconds. We gather 8 elements from the buyer and can provide a line of credit while the buyer is on the website.

What's driving growth in credit as a service?

B2B tends to be somewhere between 5 and 15 years behind what's happening in the consumer space. We've seen a tremendous change in the way purchasing happens in our consumer lives. A lot of our customers are trying to navigate this new experience and how they can make it easier on buyers. New capabilities and competencies are required now. Having a unique price for every buyer who walks into a store wasn't a use case for Best Buy previously.

The increasing dominance of Amazon is also putting pressure on sellers to remain relevant and competitive. If they become the easiest seller to do business with for a B2B buyer, they will have a stickier relationship with their buyers and hopefully capture a bigger share of their spend.