New Offering Allows Companies to Make Payments to Their Customers Without Checks by Using Either a Mobile Phone Number or Email Address as the Identifier
Bank of America Merrill Lynch today announced the launch of Digital Disbursements, a new payment solution that enables companies to make payments to their customers digitally, eliminating the need to issue a check. The payments are directly routed to the bank account of the individual payee’s choosing using either a mobile phone number or email address as the identifier. The solution leverages the technology behind person-to-person payments, a capability currently available to individual customers of Bank of America’s consumer business.
“Digital Disbursements emerges from the rapidly evolving world of payments, in which both consumers and corporations are increasingly opting for faster, easier ways to send and receive money electronically,” said Ather Williams III, head of Global Payments in Global Transaction Services (GTS). “Through this method, customers don’t have to wait for the check to come in the mail and there is no need for companies to maintain sensitive personal bank account information.” The types of business-to-consumer payments that could be supported by Digital Disbursements include rebates, refunds and claims payments.
Digital Disbursements was created to serve middle-market, large corporate and public sector clients. It uses the proven technology already in existence for person-to-person (P2P) payments, a capability currently offered by Bank of America’s consumer business through the company’s alliance with clearXchange. Individual consumers have adopted P2P payment practices in large numbers, and feedback from focus groups concluded that people are eager to receive payments from companies or government entities in the same way.
Corporate clients will receive the following benefits from Digital Disbursements:
- The ability to deliver funds to customers faster and with less complexity than a physical check.
- A reduction in end-to-end disbursement costs by as much as 75 percent when compared to a physical check. Merchants could potentially save more than US$1 billion annually by eliminating disbursement checks (1).
- Reduction in escheatment management, an administrative burden that is both costly and time consuming.
- Elimination of the need to obtain and store sensitive bank account information.
“Digital Disbursements is an example of true partnership and our commitment to collaborate across our businesses to deliver the best solutions for our clients based on their needs,” said Bill Pappas, Global Wholesale Banking Technology and Operations CIO. “By leveraging proven technology, we were able to develop an innovative solution for our corporate clients which speeds the payment process from several days to only a few minutes.”
“We are very proud to be one of the first banks to offer an alias-based business-to-consumer payments solution. Our corporate clients and their customers will benefit greatly from Digital Disbursements, which is an important step in the evolution of the payments industry in the United States,” said Dub Newman, head of Global Transaction Services, North America.
Digital Disbursements solves challenges facing payers and payees, while aligning with evolving trends in technology usage. A recent study performed by the Federal Reserve found that 85 percent of consumers and 81 percent of businesses prefer not to provide bank account information to the payee when making a payment (2). Separately, the trend towards mobile banking continues to rise, and it is anticipated that by 2018, 63 percent of the mobile consumer population in the United States will use mobile banking (3).
Digital Disbursements will be initially introduced to clients making payments in the United States. However, given the product’s global application, and that clients and their customers want the same convenience wherever in the world they do business, the bank expects to extend Digital Disbursements to other regions in the future.
“clearXchange is pleased to support Digital Disbursements, an exciting new use of the clearXchange platform that will make payments easier, faster and more secure for both corporations and their customers,” said Mike Kennedy, CEO of clearXchange. “Our partnership helps keep Bank of America Merrill Lynch at the forefront of innovation in the business-to-consumer payments market.”
Bank of America Merrill Lynch offers a global suite of electronic and paper-based disbursement solutions to help companies optimize their working capital with greater precision and control. Solutions include: low-value payments (Automated Clearing House), wire transfers, cross-border payments and multicurrency payments, as well as card solutions and ePayables. Furthermore, the bank’s expertise in foreign exchange means that companies can make international payments in over 140 currencies covering more than 200 countries and territories.
(1) Aite Group survey to 1,115 participants; Business-to-Consumer Disbursements: Time to Take Notice, June 5, 2012
(2) Federal Reserve System, Research on End-User Demand for Select Payment Attributes, 2014
(3) Javelin Strategy & Research, Mobile Payments to hit $20 Billion in 2012