Bank of America Corp.’s decision to introduce fast payouts to consumer accounts globally brings a major financial institution into a market that is attracting increasing interest from an array of payments providers. Pressure for such services has grown more intense with the growth of the gig economy and recent needs such as pandemic relief.
BofA said Thursday it is rolling out Pay to Card, a service that enables insurance, tuition, refunds, rebates, contractor fees, and other urgent payments within five minutes inside the United States. For payouts to overseas accounts, Pay to Card “often” completes transfers within half an hour, BofA says. The service relies on debit card details to process payments to holders’ accounts. The bank argues debit cards offer consistency across borders, as bank-account details vary country-to-country but debit cards feature the same number of digits.
BofA sees the new service filling a need that has grown more urgent over the past year as consumers have struggled with the impact of the coronavirus. “As the latest addition to our suite of digital B2C payment options, Pay to Card offers enhanced speed, flexibility, and convenience,” said David Kretz, head of global payments in global transaction services at BofA, in a statement. Another factor behind the new service, according to the bank, is the growth of e-commerce in recent years, which has forced companies to find ways to quickly pay refunds and other sums to consumers domestically and overseas.
“This is an interesting opportunity for Bank of America,” notes Sarah Grotta, director of the debit and alternative products advisory service at Mercator Advisory Group, Marlborough, Mass. She notes fintechs like Payoneer, Tipalti, and PayPal Holdings Inc.’s Hyperwallet (PayPal) have developed platforms for mass payouts, but argues BofA has an edge with its “built-in business clients and consumers, allowing the payment to seamlessly flow from one account to another, internally in some instances.”
Grotta adds BofA’s new service could find strong demand from public-sector entities. “They have significant disbursement needs and many of these payments are still carried out on checks today,” she says.
The bank refuses to identify third-party companies supporting the service, beyond telling Digital Transactions News that “there’s more than one provider.” The news from BofA follows by a couple of months Visa Inc.’s introduction of Visa Direct Payouts . The service relies on the Visa Direct network to enable fast payments to debit and prepaid cards and bank accounts in 170 countries, though only cards can be accessed within the United States. Mastercard Inc. offers a similarly designed service called Mastercard Send.