Bank of America has launched a new offering that allows companies to make payments to their customers without checks.
The $2.2 trillion-asset financial institution launched Digital Disbursements on Tuesday, allowing corporate customers to pay consumers digitally. For example, payments are directly routed to a customer's bank account using either their email or mobile phone number.
Through this digital method, customers don't have to wait for a check to come in the mail. Digital Disbursements reduces end-to-end disbursement costs by as much as 75%, Bank of America said in a Tuesday press release, when compared to a physical check. Also, merchants could potentially save more than $1 billion annually by eliminating disbursement checks, the release said, citing data from an Aite group survey.
Another benefit this product offers corporate customers is that they no longer need to maintain a consumer's personal bank account information. A recent Federal Reserve study found that 85% of consumers and 81% of businesses prefer not to provide bank account information to the payee when making a payment.
Digital Disbursements is available to middle-market, large corporate and public sector clients, according to a Bank of America press release. The types of business-to-consumer payments that Digital Disbursements supports include rebates, refunds and claims.
"We are very proud to offer an alias-based business-to-consumer payments solution. Digital Disbursements is an important step in the evolution of the payments industry in the United States," Dub Newman, head of global transaction services in North America for Bank of America, said in the release.