Alias-based payments are cheaper than checks and also less susceptible to fraud. Perhaps most importantly, they're what a lot of consumers want.

"There's a whole population of consumers who want to interact with the people they do business with in a mobile way," said Craig Vaream, managing director and head of North America payables and receivables at J.P. Morgan. "Look at the millennial group—they are less interested in receiving checks. Corporations need to provide a solution like this for them."

Among the corporate innovators is insurer Allstate, with $35.6 billion in 2015 revenue, which now makes claim payments to consumers using Bank of America Merrill Lynch's Digital Disbursements.

The move was "really all about our customers," said Lynn Cirrincione, director of cash and banking operations at Allstate. "This is one way we can help them to get the funds in their hands quickly."

Fast Mobile Payments to Consumers

When Allstate approves a consumer's insurance claim, the adjuster gives the customer a choice of being paid by check, by ACH, or with an alias-based payment using Digital Disbursements, a method Allstate has dubbed Fast Mobile e-Payment.

If consumers choose Fast Mobile e-Payment, they get an email or text about the payment. If they aren't already registered with Digital Disbursements, consumers click on a link to sign up and provide their bank account number and routing number. Cirrincione, pictured at left, notes that many people are already registered, perhaps because they do online banking. Once a consumer is registered, the payment is sent to his or her bank account via ACH.

Such payments are "significantly cheaper" for Allstate than sending a check, Cirrincione said. And from a treasury perspective, there are other advantages, she pointed out, including a reduction in the number of lost checks and related back-office costs, as well as fewer escheatment issues and the back-office costs those entail.

"Additionally, we're hoping we will see some of our check fraud decline," she said, as the electronic payments eliminate the chance that fraudsters might intercept paper payments in the mail.

Allstate is looking at whether other parts of the company could make use of Fast Mobile e-Payment, Cirrincione said, citing the life insurance group and dealer services as possibilities. "We're going out to each of the business areas and saying, 'What checks are you writing, and are you aware of this process? Can we help you get this and see if it will help your business?'"

Asked about the potential for making business-to-business payments this way, Cirrincione said some of the customers that Allstate now pays using Digital Disbursements may be small businesses. The platform wouldn't be suitable for larger businesses, she said, but noted that clearXchange, the person-to-person payment network established by a consortium of big banks that is utilized by BofAML's Digital Disbursements, is looking at enhancements in this area.

"'Big B to Big B' is definitely something we have on our radar," said Melissa Lowry, head of product and marketing at clearXchange, which was acquired last month by Early Warning. While the payment method works for small businesses, to be useful to big businesses it would need to be able to pass on all the information that companies need for reconciliation, she said.

Insurers Lead the Way to Digital Disbursements

BofAML's Henry said Allstate is representative of the companies currently using the Digital Disbursements offering.

"The insurance companies, in the U.S. in particular, have a tremendous check problem where they're looking at Digital Disbursements as a much less expensive way of sending reimbursements to consumers," said Henry, pictured at left. "We've seen the most early adoption there, and we continue to add new clients to the platform within that industry."

But Henry argued that Digital Disbursements could work for many other industries, such as airlines, government, healthcare, higher education, and oil and gas companies.

"We think there's a huge play for this everywhere because paper checks are still used everywhere in the U.S.," he said. "This can be a great alternative."

J.P. Morgan's Corporate Quick Pay

Last summer J.P. Morgan began offering a product that allows businesses to make alias-based payments. The product, Corporate Quick Pay, currently relies on the bank's ACH and check processing systems, but later this year J.P. Morgan plans to link it to clearXchange as well.

J.P. Morgan's Vaream says four multinational corporations are using the product and another eight are in the process of implementation.

The companies that currently employ Corporate Quick Pay, Vaream said, are an airline that uses it to send immediate payments to customers being reimbursed because their luggage is lost or their flight has been delayed; a cosmetics company that uses it to pay its sales force; a college textbook company that uses it to send payments to students who return their books at the end of the semester; and a company that provides consumers with rides via a mobile application, which uses Corporate Quick Pay to pay its drivers. In addition, JPMorgan Chase's own retail arm has various Chase businesses using Corporate Quick Pay to disburse rebate payments to consumers.

From the perspective of corporates, a payment system's ability to connect to ERP systems is important, as is the ability to transmit all of the remittance data needed to reconcile payments, Vaream said, noting that Corporate Quick Pay payments offer 25 data fields, each of which has 50 characters.

Cost Advantage of Digital Payments

Cost is one obvious advantage of such payments.

Nancy Atkinson, a senior analyst at Aite Group, noted that costs are difficult to determine because the internal costs to companies for things such as staffing, space, and hardware and software are not known. But she estimates that electronic payments are about one-third to one-half less costly than paper payments.

J.P. Morgan estimates that companies that use Corporate Quick Pay can save 50% of the cost of traditional paper-based payments.

BofAML's Henry noted a 2015 benchmarking by the Association for Financial Professionals that put the all-in cost of a check at about $6. "A digital disbursement is much less than $6," he said.

Henry said using Digital Disbursements also reduces security risk for companies because they're not storing consumers' bank account numbers and routing numbers that could be hacked. "They're just storing emails, and clearXchange is the storage entity for the payment tokens," he said.

But Allstate's Cirrincione comes back to the issue of customer satisfaction. "I would stress to other companies that it really is a game changer," she said. "It allows us to really do what our customers ask."