Virtual Payables Direct, Bank of America’s new business-to-business payment offering, further expands the bank’s capabilities in instant payments, allowing UK users and the Single Europe Payments Area (SEPA) to pay suppliers via direct bank transfer. The service builds on BofA’s existing virtual cards program, offering traditional benefits such as extended payment terms, in addition to the instant payment function.
Europe is a key area for the growth of B2B card spending. A report from Javelin Strategy & Research estimated the overall commercial card spending growth rate for Central and Eastern Europe, the Middle East, and Africa at 15.3%.
With Virtual Payables Direct, once an order is placed and the invoice is approved, the buyer can request that the payment be processed through the new platform. At that point, a virtual card is generated, but the payment can also be made via bank transfer. Bank of America officials say this new feature will simplify the payment process, reduce complexity for suppliers, and lower the risks associated with payment acceptance.
“Virtual Payables Direct offers our clients in EMEA [Europe, Middle East and Africa] greater flexibility as they can make card payments to any supplier in the region, regardless of whether the supplier typically accepts card payments,” said Chris Jameson, Head of Product Management for Global Payments Solutions (GPS) EMEA, in a statement. “The payments are made much earlier in the procurement cycle, thereby helping to improve important supplier relationships and allowing the buyer to take advantage of any prompt payment discounts.”
BofA is promoting Virtual Payables Direct as a solution to help both buyers and vendors manage their cash flow more effectively. It allows buyers to make larger, one-off, or last-minute payments, while suppliers benefit from receiving payments more quickly.
A Lane for Banks
Virtual card payments, also known as ePayables, remain an area where banks and other large financial institutions are better positioned to take advantage of advances in technology compared to smaller fintechs.
“The platforms for ePayables are often sourced from a financial institution that supplies other essential treasury functions to an enterprise, such as ACH, wire and checks processing,” Albert Bodine, Director of Commercial and Enterprise Payments at Javelin, wrote in his report. “Fintechs play in this space as well, but they still require a sponsor bank to supply payment accounts, so the majority of ePayables programs are sourced with chartered financial institutions directly.”