Bank payment obligation (BPO) is an irrevocable and independent undertaking given by the obligor bank (usually the buyer’s bank) to pay for goods or services in favour of the recipient bank (seller’s bank) within the agreed period under the condition of a successful electronic matching of data.
- Simple and fast implementation
The seller (exporter) directly forwards documents regarding the commercial transaction to the buyer, and delivers the required data from the documents to their bank. The banks involved in a BPO transaction work through the TMA application (TMA - Transaction Matching Application) exclusively using data, and not commercial agreements, documents, goods, services or actions to which the data may refer.
- Automated data matching verification process
The payments are made if the data are automatically matched and predefined BPO requirements are met.
- By arranging a BPO, you reduce the risks regarding open account payments and advance payments
For the seller (exporter), BPO reduces the risks related to payment upon delivery (so-called ‘open account’, the most frequently used method of payment), since BPO includes a payment undertaking incurred by the obligor bank. In terms of advance payment, BPO offers greater security for the buyer (importer) since the payment is made only after matching the BPO conditions.
- Financing without new indebtedness
If you are a seller (exporter), and you have arranged longer payment terms with your partner based on a BPO, we can offer payment before the due date, without recourse, thus improving your liquidity without new indebtedness. In that case, financing is based on the creditworthiness of the obligor bank, and the risk of collecting receivables is transferred to the seller’s bank (the exporter’s bank).
- Reduce the risk of a foreign partner and its bank through confirmation of a loro (export) BPO
If you are in the role of a seller (exporter), we can take over the credit risk of the obligor bank (the buyer’s bank) by confirming the BPO. Upon confirmation, we shall be obliged to pay you if the obligor bank does not meet its due payment obligation.
- Application of the International Chamber of Commerce rules
BPO is regulated by Uniform Rules for Bank Payment Obligations (URBPO) issued by the International Chamber of Commerce in Paris. The Rules are automatically applied to BPO transactions.
- Providing expert advice
Years of experience and expertise in standard and complex transactions, our professional and trained staff and numerous awards in the field of trade finance vouch for a high quality of service.
- International presence of UniCredit Group
Zagrebačka banka and UniCredit Group represent a strong partner that can support your international business operations.
UniCredit Group's video about Bank payment obligation