I had never heard of them before a couple of days ago, either. I've googled it and I'm still trying to understand exactly how they work. I talked to Oracle last night and my current understanding is that the company creates a vendor with an Alternate Payee (the bank). The company then sends their vouchers to the bank which provides the vendor with a temporary credit card number for the exact amount of the voucher. The vendor uses the virtual credit card to pay their supplier. The company then pays the bank directly. I think.
We haven't done it yet, but had some discussions to understand how it works. My understanding is that you send a payment file to the bank / credit card processor, not sure of the format. Then the bank pays the vendor directly via a virtual credit card. The vendor gets an email telling them they received a payment with a link to the portal for them to claim it.
Pros: It takes you out of the loop from having to maintain ACH information, and I believe transfers some of that risk to the bank. The bank maintains the payment link to the vendor. In addition (and this is the selling point) you get a rebate from the credit card processor.
Cons: Your vendors get charged a service fee for accepting a credit card transaction (making it possible for you to get a rebate). Also, the credit card processor contacts your vendor to get them to sign up.
It may be the wave of the future... I get hit up at every conference to 'just send us your vendor file and we'll tell you how many already participate', and it seems like more and more companies are going to some form of it.
Thank you for the information. That is similar to what my VP was saying. It's never quite that easy from our end, is it! The one bank we've talked to so far just needs a text/csv file from us with the payment information. I assume each bank has their own format. On the JDE side, each participating vendor has to be set up with an Alternate Payee (the bank).