Ariba Hones Financial Services Support

SAN MATEO (08/21/2000) - Business-to-business trading exchange transaction services provider Ariba Inc. is boosting the financial services offerings for its B2B Commerce Platform, moving beyond payment services to complex capabilities, company officials said Monday.

Ariba describes its Ariba Commerce Services Network (Ariba CSN) as "a single global platform," a networking infrastructure that will serve as the gateway for a variety of services including four areas where Ariba will need partners.

Those areas include purchasing cards, which are a special form of a credit card for small-dollar purchases online, global funds transfer, escrow, and equipment finance.

Moving to "a more complex set of services" requires an array of business partners, said Randy Joss, director of commerce services and head of finance strategy at Mountain View, Calif.-based Ariba. "It's an open, multibank platform," Joss said, adding that the openness is intended to encourage a consistent set of services globally. Ariba's agreements with global banks and financial services firms are not exclusive. "We can't afford to tie ourselves to one bank," Joss said.

For major financial transactions such as global funds transfer, Ariba will enlist the services of ABN AMRO, a Netherlands-based bank, and Bank of America, based in San Francisco, partners of Ariba. Funds transfer services will also be offered to Ariba participants through San Francisco-based BankServ, which will offer Ariba buyers and sellers access to global payment options such as BankServ's Automated Clearing House (ACH) and wire transfer capabilities.

The funds transfer support options are targeted at "higher-dollar items," and will provide a capability for scheduling payments as well as making certain that payments will be made in a 30-day period, Joss said. "This dramatically decreases collection costs," he said. "It's new in the Ariba environment and to b-to-b marketplaces in general."

The need for b-to-b purchasing-card payment and related capabilities has prompted Ariba to work with American Express, U.S. Bancorp, and Visa International, who have signed on to provide credit card and payment system services, Joss said. Ariba has also begun work on an integrated card payment-processing utility for online b-to-b transactions, using the offerings of Amex and VeriSign's Internet-commerce encryption services. The integrated payment service will facilitate exchange payment transactions between buyers and suppliers, triggering requests for payment -- based on established purchase order prices -- at the time of shipment, said Ariba officials in June.

Ariba has a new relationship with Escrow.com and its subsidiaries for Internet-based escrow capabilities and transaction support, Ariba officials said.

Financing equipment purchases online is an important area that's not been "well-addressed" by b-to-b marketplace vendors, Joss said. Ariba has tapped Pure Markets, a San Francisco-based trading exchange for equipment financing, for its access to lenders and a set of tools required for selecting, executing, and managing transactions. Pure Markets will be integrated with the Ariba CSN platform to help users "source large-dollar capital equipment," he said.

The lack of more sophisticated financial services has been an obstacle in general for b-to-b exchanges, Joss said. "In some cases, you need a more complex set of services ... to facilitate e-commerce," he said.

In addition to the alliances, the groundwork is being laid to allow Ariba customers to take advantage of new online offerings such as FinancialSettlementMatrix.com, a joint venture established earlier this month by Citigroup, Enron, i2 Technologies, S1, and Wells Fargo to streamline the b-to-b payments process.

Ariba will begin offering these integrated services starting later this year with the debut of the Amex/VeriSign payment services. The other related products and services will start to roll out during the first quarter of 2001, Ariba officials said.

Eugene Grygo is an InfoWorld senior editor.

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