‘PayPal for business’ Traxpay gets $4m to take on US

The market for online business-to-business payments is pretty huge, so it’s no surprise that it’s a lively sector. Now Traxpay, a German-U.S. operation that pitches itself as the PayPal (s EBAY) of B2B, says it’s ready to carve out a bigger slice of the action for itself.

Traxpay is set to expand into the U.S. market in Q3 – indeed, its headquarters are in Mountain View, even though its business has historically been in Germany and its R&D operations remain in Cologne. And to back that expansion, it’s just picked up a $4 million investment from Berlin’s super-active Earlybird Venture Capital. Oh, and it just got a new CEO too, in Netscape/Wind River vet John Bruggeman.

On a simple level, what Traxpay does is very similar to what PayPal does — both services involve the creation of an escrow-like account that the customer can top up, and which then gets used for making or receiving payments. So far so easy – but in the B2B world, nothing’s that simple, and that’s where Traxpay reckons it can bring extra value.

According to Bruggeman, competitors such as Fundtech and Bottomline “don’t offer 24/7 service that integrates into your back-office operations like your SAP or Oracle operations”. Whereas Traxpay does.

“Companies want to run their business using their SAP (s SAP) system,” Bruggeman said. “They want to book, bill, put it into their general ledger. They want to be able to complete the payment within the same context and get full resolution on that payment. This is completely unique.”

Earlybird partner Jason Whitmire was also impressed, clearly. In a statement, he said the VC firm had looked into 10 companies operating in the B2B payments space before settling on Traxpay.

“Traxpay’s unique blend of enterprise software, payments and banking expertise will deliver one of the most disruptive technology solutions since PayPal reshaped the B2C payments market,” Whitmire said. “Moreover, we believe Traxpay has the potential to become the de-facto B2B online payment network.”

Mind you, the company already has serious backing. Its real-time payments system was co-developed by outsourcing behemoth Accenture, its banking partner is PrivatBank 1891 (owned by NTT DoCoMo, weirdly), SAP is also a partner, and its big customer is EOS Deutschland, Europe’s largest collections company.

Of course, in the B2B payments world, one customer that size acts as a hub for the others:

“The hub customer directs its suppliers and partners to join them in the payment,” Bruggeman told me. “EOS have connections to companies like the Otto Group and Würth and others. They’re all part of the same commercial trading network.”

All very solid. So how big was that sector again? Well, there’s about $250 billion up for grabs.

“If we carve out just a bit of that through efficiencies and making our customers more effective, we can build a massive company here,” Bruggeman said.