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AmEx (AXP) Adds Digital Payment Features to Early Pay Solution

Zacks Equity Research
·4 min read

American Express Co. AXP has announced that it is adding capabilities to its Early Pay program for its U.S. customers. The company has enhanced  the Early Pay service with new digital payment features, which help businesses save time, money and maximize their cash flow

Launched by American Express in 2018, Early Pay is a combination of supply-chain finance and early payment discount capabilities. Designed for large U.S. companies, which buy goods and services from U.S.-based suppliers, Early Pay links vendors to an online platform to have their invoices paid before their due dates for an early payment discount.

This solution streamlines the vendor payment process for large corporate buyers while accelerating cash flow for the vendors. The solution offers several options for corporate buyers. Companies that wish to pay early and avail of the discount can get financing services from American Express. This option allows buyers to reinforce their cash flow while maintaining the existing payment terms with their vendors. Companies then pay back American Express on the original invoice payment date.

The latest enhancement to the Early Pay program reflects the company’s ongoing investment in best-in-class, digital business financing and B2B payment solutions.  

Digital payment took centerstage with the outbreak of COVID-19 and more and more businesses are becoming increasingly positive about digital payments. Per management, businesses are more focused on digital transformation than ever before with 84% U.S. business decision makers confirming that they feel positive about transitioning to a digital payments system. Also, businesses are seeking a simple digital solution among a rapidly-evolving and fragmented supplier payments landscape.

For buyers, the enhancement to Early Pay will be a boon as the adoption of automation and early payment discount functionality will help them avail of an estimated sum of $8.84 billion in untapped savings from discounts.
Suppliers will be better off by getting cash before time, which in turn, will enable them to manage cash flow efficiently and get financial flexibility.
Early Pay will continue to evolve with additional features and benefits rolling out in 2021.

American Express’ Early Pay program is one of the many ways to serve the B2B market. The company wants to expand in the B2B market, which is growing rapidly. Its expanded partnership with Coupa reflects its strategy to fortify its footprint in the B2B payments space to better serve its customers and offer the best possible digital payment solutions. The global B2B payments market value was $125 trillion in 2019. According to ResearchAndMarkets.com, the global digital B2B payments market has observed stability in the past few years and the space is further expected to rise at a staggering rate during the 2020-2024 forecast period.

Growth in the global digital B2B payments market will be bolstered by a host of drivers like expanding real-time payments, increasing adoption of cloud-based solutions, escalating smartphone penetration, emerging B2B e-commerce industry, swelling business process automation, rising urbanization, growing cross-border payments, etc.

This expanding B2B payment market caught the attention of other companies as well. While Mastercard Inc. MA is vying for a plum market share via its Mastercard Track program, Visa Inc. V is trying to achieve the same through its Visa B2B Connect payment network.

In the past six months, American Express has rallied 33% compared with the industry’s growth of 6.5%. Another company in the same space, namely Discover Financial Services DFS has gained 93% over the same time frame.

American Express carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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American Express Company (AXP) : Free Stock Analysis Report
 
Mastercard Incorporated (MA) : Free Stock Analysis Report
 
Visa Inc. (V) : Free Stock Analysis Report
 
Discover Financial Services (DFS) : Free Stock Analysis Report
 
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