Virtual IBANs And How They Benefit A Business

For years, businesses have been searching for simple and effective ways to make cross-border payments as seamless as possible for themselves and their customers. 

Based on a standardised international numbering system an IBAN or International Bank Account Number can identify a bank account anywhere in the world. They are indispensable tools for sending and receiving money between accounts located in different countries. However, the onboarding process for traditional business account solutions usually involves long, laborious onboarding processes. 

With virtual IBAN accounts, implementation is much simpler. They enable companies to expand their supply chain and offer settlement services to their multinational clients since vIBANs can be used to send and receive payments from anywhere in the world.    

What is a virtual IBAN?

Ideal for companies that conduct a significant volume of international payments, a virtual IBAN (International Bank Account Number), also known as a vIBAN, is a phantom current account issued by a bank that allows the account holder to accept an incoming payment and reroute it to a real bank account. They allow those businesses to simplify transaction processes and have greater control of their transactions without spending the time and money necessary to set up and handle multiple physical bank accounts. 

Why use a virtual IBAN?

While the virtual IBAN functions just like the IBAN with a primary bank, it has several distinct advantages for businesses:

  • Setting up a business account is easier

As many entrepreneurs are aware, opening a business account with a traditional bank can be a complicated and time-consuming process. That is not the case for a virtual IBAN obtained from an online platform. Virtual IBANs eliminate much of the bureaucracy associated with opening an account at a traditional banking institution.

  • Increased functionality 

Instead of directing payments to a single bank account, business owners can direct payments from various countries to separate accounts in chosen currencies, making them easier to handle. This simplifies reporting and accounting so you can create sub-accounts and statements for various product lines, as well as sort them by customer. 

  • Enhanced security

In terms of security, virtual IBANs are stored in the cloud in redundant, encrypted servers with a very low risk of theft or downtime. 

Due to end-to-end transparency and fund segregation, it is also easier for companies to comply with AML (Anti-Money Laundering) and KYC (Know Your Customer) rules.

  • Accelerated business

With virtual IBANS, businesses are able to make and receive most payments instantly. Depending on the payment solution used, transfers to and from the EU can also be processed on the same day. 

  • Significant cost-savings

Some businesses have discovered that using a virtual IBAN can reduce banking fees by up to 20% – especially those that do a lot of business online in various global markets. This is because many traditional banks charge exorbitant FX and transfer fees for converting each payment that comes in. 

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