Bank of America Merrill Lynch today announced the launch of Digital Disbursements in the US, 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 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.

Consumer requirements

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 payment2. 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 banking3.

Target market and benefits for corporate clients

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.

BofA Merrill believe that corporate clients will benefit from Digital Disbursements by having:

• the ability to deliver funds to customers faster and with less complexity than a physical cheque
• 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 checks1
• a reduction in escheatment management, an administrative burden that is both costly and time consuming
• the elimination of the need to obtain and store sensitive bank account information.

Rollout

Digital Disbursements will initially be 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, BofA Merrill expects to extend Digital Disbursements to other regions in the future.