TAM-Europe in BPO transaction and plans to do more with tech

News | 3 August 2017

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TAM-Europe, a Slovenian commercial vehicles manufacturer, has completed the first bank payment obligation (BPO) transaction in Austria.

The company paid its suppliers in Germany (MAN Truck & Bus) and Italy (ISAF Bus Components) using the BPO, when acts as a digital letter of credit.

A BPO is an irrevocable undertaking of the buyer's bank to the seller's bank (in this case Commerzbank and UniCredit) to make payment on maturity, based on the successful matching of agreed electronic trade data on SWIFT’s Trade Services Utility platform.

Enno-Burghard Weitzel, head of product management trade services at Commerzbank said, “With the first-ever BPO transaction in Austria, we’re front-running the digitisation of the trade finance business. These client-centred digital services are the basis of our enhanced modernisation efforts. By focusing on new digital trade finance services – like distributed ledger technology/blockchain-enabled offerings – we are paving the way for the supply chain of the future.”

The BPO has not enjoyed the level of take-up it was expected to achieve, and now risks being overtaken by other technologies (primarily blockchain) that are capturing the trade industry’s imagination.

But this has not phased TAM-Europe, who see the technology as a big part of their future trading processes.

“With the BPO, we are following the digitalisation trend. We see it as a new payment instrument that can be a successful supplement to open account transactions and letters of credit. Gradually, we aim to handle all our trade transactions with the BPO,” said Bryan Zhao, CEO of TAM-Europe.

Elke Endres, treasury, export finance and insurance at MAN Truck & Bus added, “We appreciate the fast and cost-saving BPO processing which supports us in our ambition to simplify our trade finance transactions.”

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