In a continuing string of B2B payments tech activities vis-à-vis collaborations, partnerships, etc, JPMorgan announced that they will have a ‘strategic collaboration’ with Bora Payments Systems to deliver virtual cards. The brief release in Cards International does not have a ton of detail nor any financial arrangements, but since we have some knowledge of Bora, the expectation is that JPMorgan will push into the buyer-initiated virtual card space to improve the supplier experience and gain further adoption of cards in payables.
‘Bora’s payment processing platform, called Payer Direct Hub (PDH), will automate delivery of JP Morgan’s Single Use Accounts payments that are linked to virtual card transaction….The patented platform enables straight-through transaction processing and remittance posting of virtual card payments to suppliers. Due to streamlining of the accounts receivables process, vendors will be able to accept virtual card payments from their corporate clients. Further, this platform will help slash down labour costs and boost cash flow….The bank’s clients will be able to speed up SUA programme growth due to increase in supplier adoption of virtual card payments.’
For readers who are familiar with virtual cards, the single-use account model has several versions. One version, supplier-initiated, requires the supplier to process a CNP transaction in order to get paid (or have a tech partner process on their behalf). This is the dominant model by which SUAs are currently processed, which is not optimal from the supplier perspective. We recently discussed this conundrum in a report titled Supplier Enablement: Get More Flexible and Technical, which advocates creating a more hospitable acceptance environment for suppliers if issuers wish to gain more than the current <2% share of B2B payables flows. The Bora system enables the promise of STP directly through to supplier receivables posting, not just half way. We expect that the recently announced Chase Merchant Services organizational combo with Treasury Services in the Corporate and Investment Bank will smooth this effort as well, since the acquirer part of the integration with Bora’s platform is easier to accomplish, removing a key source of adoption friction.
“Together, this powerful organization, which already includes our Trade Finance and Commercial Card business, will continue to develop our own worldwide payment capabilities, and partner with digital payment companies looking to expand in the U.S. and internationally.”
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group