UniCredit has completed the first bank payment obligation (BPO) in Italy to replace an open account transaction in an existing buyer-supplier relationship.

The transaction involved SPIG, an industrial cooling system producer based in Arona and one of its German suppliers, and was conducted between UniCredit’s Italian and German branches.

According to the bank, an extension of this service to other Italian importer and exporters is already planned.

“Immediately after the official release of Swift’s URBPO in July 2013, we started to prepare the groundwork to become the first bank in Italy to handle a BPO, and we are very proud to have achieved this goal.

“We are pursuing a two-fold strategy: we will go live in countries outside Italy and Germany where we operate and in parallel we will increase the number of transactions and clients that utilise the BPO in the countries where we have already gone live,” UniCredit global transaction banking co-head Claudio Camozzo tells GTR.

Launched by Swift in 2010, the BPO is promoted as more efficient than letters of credit – being entirely electronic and safer than open account transactions – as an irrevocable bank payment promise. However, awareness raising and take-up have been slow – currently 17 banking groups globally are live with the instrument.

“Even if the numbers and volumes of BPO are now still moderate, we are convinced that the concept of automated invoice reconciliation and settlement, in combination with payment risk mitigation and liquidity provisioning, will prevail,” adds Camozzo.

UniCredit completed the first BPO in a new supplier relationship between Germany and Japan last October.