The Banking Payment Obligation (BPO) — the electronic document designed to replace the paper-document Letter of Credit — is steadily gaining ground among banks and corporates, but progress is slow, according to Cash & Treasury Management File.
Last week, Türk Ekonomi Bankası (TEB) became the 16th banking group worldwide to go live with BPOs. That’s up from eight banks in April 2014 and only six banks a year ago. Along with TEB, the live-with-BPOs group includes Bank of Tokyo Mitsubishi, Bank of China, Standard Chartered, KEB, SCB, Hua Nan Bank, Bangkok Bank, Turkiye Is Bankasi, BNP Paribas, ANZ, CIMB, China CITIC Bank, Maybank, UniCredit, and Commerzbank.
Another 15 banking groups are currently testing BPOs, with 58 more earlier in the adoption process, according to financial network SWIFT.
Meanwhile, the number of corporates using BPOs has jumped from 22 in November 2013 to 45 this month. That includes companies ranging in size from BP and electronics manufacturer Omron down to German SMEs that are using BPOs through Commerzbank and UniCredit. Other countries doing BPO-financed trading include China, Japan, Korea, Taiwan, Hong Kong, Singapore, Malaysia, Thailand, Turkey, U.A.E., Oman, and Belgium.
But while both the numbers of banks and corporates using BPOs have doubled, they have a long way to go to convince users of the more traditional Letters of Credit and Open Account Operations. While some issues may involve technology challenges and reluctance to leave paper-based systems, some critics argue that, so far, BPOs don’t actually provide enough additional value to justify the cost of a change.