The strategic alliance between Earthport and BofA Merrill announced last month has generated much discussion as to what it will produce. A discussion with Ather Williams, Managing Director, Global Payments & Global GTS Strategy, Global Transaction Services at Bank of America Merrill Lynch revealed that BofA Merrill regards the alliance as a very cost-effective way to:

1. expand their ACH footprint (BofA Merrill already has access to 50 markets and 19 currencies on their own) into the smaller GDP countries where the expansion of their correspondent bank network and membership of local clearings is prohibitive for the level of business generated. 
2. provide the infrastructure to develop new payment functionality on top of this expanded network, e.g. adding full remittance data, tracking information, etc., which are going to be the real differentiators between the banks’ low value payment services. 

The prime markets initially for the new low-value payment services they are considering are: 1) big to small payments, e.g. government to residents, employers to employees, and 2) peer-to-peer. However, in the longer term, as the Faster Payments service in the UK showed, B2B payments cannot be ruled out as many wire payments don’t actually need fast payment processing and will be attracted by the far lower costs.

Williams summed up BofA Merrill’s approach to low value cross-border payment saying, “We are looking for the best way to add value for our corporate clients. Earthport is just one part of this approach which will take us into some 25 new markets. The future is around data and overall efficiency of the business transactions.”