As part of their treasury management service offerings, some banks offer their business clients the ability to integrate their bank account into external platforms. Traditionally, this has enabled businesses to link their bank account to accounting or enterprise resource planning (ERP) software. This functionality is often referred to as direct (file) transmission and is how banks enable non-bank technology providers like Modern Treasury the ability to request the bank to push or pull payments without ever intercepting a client’s funds to do so.
With any basic corporate checking account, you can send ACH or wire transfers through the bank portal. However, when you are dealing with high volumes or dollar amounts, getting details and tracking many different payments through the web portal can become overly complicated and hard to manage.
Direct transmission means your business systems can “talk” to your bank account through direct channels. These channels are computer-to-computer and commonly operate over SFTP (secure file transfer protocol) or API (application programming interface). What this means practically is that you can initiate, approve, and track payments in systems outside of your bank portal.
Banks offer direct transmission to customers who manage large volume, high dollar value, or complex payment flows. It’s their way ensuring as a company grows, they have the tools they need to manage payments safely.