PayPal gives B of A Merrill a global option for digital payments
An agreement with PayPal for cross-border payments has allowed Bank of America Merrill Lynch to add the word "global" to its three-year Digital Disbursements product.
The agreement will allow U.S.-based commercial clients of B of A Merrill to make international payments in local currencies to payees who hold PayPal accounts.
It officially launches the Global Digital Disbursements option of the disbursements product, as payments can be made from the U.S. to PayPal account holders in Mexico, France, Germany, Italy, the U.K. and the Philippines.
B of A Merrill says it is the first U.S. financial institution to offer business-to-consumer payments through PayPal, using an e-mail address as an identifier rather than forcing clients to obtain bank account and routing information from those receiving funds.
The bank saw a need for Global Digital Disbursements to represent "a new type of payment that sits along traditional correspondent banking channels, where we've always routed money through wires, ACH and paper checks," said Dean Henry, managing director and head of innovation for global transaction services at B of A Merrill Lynch. "Our position is that we would be remiss if we didn't view digital as a payment type."
"We embarked on this strategy several years ago when we launched digital disbursements in 2014, and this is the next step and we expect to pick up steam and expand our digital footprint," Henry said.
Expansion would come in the form of working with more countries in the PayPal network, or with B of A Merrill establishing agreements with other digital wallets in overseas markets, he added.
"The global trend that is really driving this is higher volumes of lower-value payments," Henry said. "It is not only happening domestically, but also cross-border as you have e-commerce growing at rapid rates everywhere."
The move to digital payments associated with PayPal accounts follows previous B of A Merrill initiatives of the past few years in which the bank established interbank business-to-consumer payments through e-mail addresses or phone numbers.
Various businesses will benefit from the global service, the bank said, including people who perform contract work; online marketplaces where proceeds need to be disbursed to online sellers; non-profit organizations that need to disburse financial aid; insurance claim payments; and higher education institutions that disburse stipends to students.
It's not the first time B of A Merrill has worked with PayPal. In August of 2017, the bank established a relationship with PayPal that allowed retail customers to transact with PayPal in stores and link their B of A Merrill credit and debit cards to their PayPal accounts.