Ariba, Amex venture stakes claim for share of e-marketplace action
- 20 March, 2000 12:01
Despite a "pent-up demand" among companies for the introduction of online settlement processes that will boost the efficiency of business-to-business marketplaces, Ariba and American Express may not be the team to do it.
The two companies last week formed an alliance to develop and market new electronic payment services for e-marketplaces, an IT sector that is "exploding" across the Asia-Pacific region, according to Joe Sweeney, research director at Gartner Group.
He said that while business is being conducted online, most transactions are still being settled offline.
But while Sweeney acknowledged Ariba and American Express could fill the void if their alliance is successful, he suggested customers would instead be looking to the banks to move the processing of payments online.
"There is a pent-up demand for online settlement processes," Sweeney said. "But companies would prefer the financial institutions they already have relationships with to develop [those processes] because they don't want to have to deal with yet another bank if they can help it."
Nevertheless, Ariba and American Express are confident their expertise and global reach will put them in a good position to establish online payment processes that can achieve critical mass.
"As the global leader in corporate payment and financial services, American Express adds tremendous value to the Ariba B2B Commerce platform," Larry Mueller, president and CEO of Ariba, said.
"Our two companies will make it easier for mutual customers to rapidly participate and benefit from the new B2B economy."
Under the terms of the agreement between the two companies:
* Ariba and American Express will jointly develop and market new advanced electronic payment services.
* Ariba and American Express will provide support for their mutual customers' implementations, including co-enrolment of suppliers.
* Ariba and American Express will provide open interoperability across their respective customer bases of suppliers and buyers.
* American Express will use the Ariba B2B procurement system throughout its worldwide operations.
Winning just a sliver of the transaction fees involved in business-to-business payments could be a major cashcow for American Express and Ariba.
As revealed by Computerworld (March 13, p1) Forrester Research predicts that by 2004 almost $US1 trillion worth of transactions will be conducted each year across e-marketplaces in the Asia-Pacific region alone.