Virtual Payables Direct (VPD) allows buyers to make GBP and EUR payments by virtual card to suppliers who prefer bank transfers. The solution provides buyers with all the usual working capital advantages of a card transaction such as extended payment terms, in addition to a new enhancement that allows suppliers to be paid via a direct bank transfer.

“VPD puts virtual cards and bank transfers into one product,” explains Chris Jameson, Head of Product Management for Global Payments Solutions (GPS) EMEA at Bank of America (BofA). “We’ve seen increasing demand from treasurers to use cards for B2B payments, and this product helps them pay their suppliers with a card as well as optimise working capital because the process benefits from all of the terms of a card programme.”

Meanwhile the benefits for the suppliers comprise prompt payment and a bank transfer, their preferred settlement route. Suppliers often don’t accept cards because they lack the technology set-up, but VPD eliminates the need for suppliers to perform a technical set-up to process card payments. Moreover, not every supplier likes to receive card payments and VPD doesn’t rely on supplier acceptance or enablement. “This payment solution is very flexible,” Duygu Tasdelen-Stavropoulos, Senior Product Manager – B2B and Payables, GPS EMEA explains. “It can be used for any type of B2B payment with any category of vendors.”

VPD offers treasurers the flexibility to pay for last minute purchases and large payments, incorporating working capital flexibility. Tasdelen-Stavropoulos says it offers corporate clients different levels of integration whereby VPD can come as a standalone platform to facilitate ad-hoc and strategic payments but it can also offer batch file payment solutions and host-to-host connections. “We adapt to our corporate clients’ requests and needs and are able to offer alternatives,” she says.

VPD is an attractive option for corporates because it can facilitate payments to suppliers they might not regularly use, continues Tasdelen-Stavropoulos.

BoA’s latest product reflects innovation in the B2B payments space where the regulatory environment and new technology are driving change. But despite the level of innovation, Jameson notes large corporates continue to face challenges like slow manual processes, high transaction costs and a lack of standardisation and interoperability that causes inefficiencies and delays. “There are rapid developments in the market and we are aiming to simplify and speed up those wholesale payments that benefit B2B,” says Jameson.

The global B2B payments market is growing rapidly and is projected to reach over US$2.4trn by 2031.

Businesses can juggle thousands of vendors with thousands of invoices to pay, which places a significant strain on accounts payable and finance teams. Fraud is also a risk with a high volume of communication going through unsecured channels, like email and phone. Even within accounts payable departments, teams can be siloed, and/or the process can involve multiple people working across multiple teams, contributing to a lack of full visibility and oversight.

He explains one of the main challenges is integrating new technology with legacy systems and that often leads to the uneven adoption of digital solutions.

“Addressing this challenge requires us as banks, and corporates, to continue to invest and make sure the security and connectivity improves and that we continue to standardise payment solutions,” he concludes.