- Mastercard announced a partnership with artificial intelligence (AI) startup Stargo Monday, aiming to streamline and optimize freight payments, according to the press release.
- The news comes not long after Stargo integrated its services with BluJay Solutions, a supply chain software provider.
- Drewry Supply Chain Advisors found current payment system inefficiencies in the ocean shipping industry amount to $34.4 billion lost every year due to a lack of trust and low level of automation, according to a study provided to Supply Chain Dive.
Late payments or disagreements over payments often plague companies along the supply chain and can diminish a company's financial health. To improve payment processes and reduce disputes, some companies are turning to technological innovations, including blockchain, automation and AI.
Mastercard wants to help the freight industry digitize payments and address specific stumbling blocks, including automation and lack of trust. Drewry's study found small and medium sized businesses especially struggle with transparency and automation in payments, so Mastercard's new partnership aims to level the playing field for freight while also accelerating the payments process.
"One of the new verticals we've been looking at is freight," Chris Fendley, senior vice president of enterprise partnerships for Mastercard, told Supply Chain Dive. "By combining what [Stargo has] got with the algorithms and routing capability, we realized if we could overlay a payment capability, we're hoping we can provide comprehensive solutions that addresses a number of [the freight industry's] business challenges."
Fendley said the new partnership is a pilot project that will begin in the fourth quarter of 2018. He hopes that by the end of 2019, Mastercard and Stargo will have enough data to implement a more permanent solution for freight.
"What we want to do with this pilot is to test our assumptions and engage closely with the industry, and then learn from the pilot what the realistic expectations are from everyone's perspective," Fendley said. "This is not a short term answer, we expect this to be a journey."
The implications of initiatives such as Mastercard's extend beyond freight — more efficient, transparent payment processes could be the first step to avoiding fallout with suppliers, which Sears has experienced, and could improve supplier relationships, especially for struggling sectors such as the auto industry.