JPMorgan Chase & Co. has started offering a corporate payment system that assigns a unique account number to every transaction made on purchasing cards so companies can track them.
The announcement Monday, which followed a similar rollout last month by Bank of America Corp., underscores the race to shift corporate customers from paper-based payment systems to electronic ones.
The systems differ in the way they manage payments. B of A's system creates a payment account for each supplier, while the JPMorgan Chase system produces an account number for each payment.
Frank Dombroski, a vice president in JPMorgan Treasury Services' commercial cards unit, said the New York company's ExacTrac system links JPMorgan Chase's purchasing card system to the computer systems that midsize and large corporations and government agencies use for ordering and invoicing, he said.
The first company to test ExacTrac, an online hotel reservations firm, has executed $300 million of transactions over it in the past two years, he said.
Three other companies have begun using it in the past six months, and JPMorgan Chase is working with 20 more purchasing card customers to connect their procurement systems with ExacTrac, Mr. Dombroski said.
Anthony J. Carfang, a partner at the Chicago consulting firm Treasury Strategies Inc., said that such corporate payment systems are likely to become increasingly widespread among banks as they try to increase their cash management revenue.
Purchasing cards - credit cards issued to companies - are typically used for small and midsize purchases for specific departments at a company, such as office supplies. Companies say that one of the most important benefits of using the cards is that they generate detailed invoices that the companies can use to track expenses.
ExacTrac lets buyers match their payments to authorized purchases even if the merchant or supplier cannot provide line-item details, Mr. Dombroski said. Companies typically use ExacTrac to make payments of $1,000 to $20,000 from the corporate headquarters. Mr. Dombroski said one customer used it to pay for $100,000 of tires for its corporate fleet.
Being able to track individual payments provides companies with details about whom they are paying, and why. For example, the hotel reservation company that tested ExacTrac works with hundreds of hotels on behalf of thousands of customers, and because many of the hotel rooms are priced the same, it receives many bills for the same amount.
"They were having a heck of a time reconciling their bookings against their customers' bookings," and being able to follow specific payments resolved that problem, Mr. Dombroski said.
ExacTrac is one of several efforts by JPMorgan Chase in recent years to encourage corporations to pay electronically rather than with paper checks.
Mr. Carfang said initiatives such as ExacTrac and Bank of America's ePayables Solution are "a whole new generation of payment services for financial institutions," involving the convergence of checks, wires, ACH payments, and cards.
"What you're seeing is a real transformation of the payments business into a one-stop settlement business," Mr. Carfang said. "These services go well beyond the settlement."
