Organisations have been looking for simple and effective ways to make cross-border payments as frictionless as possible for themselves, and their clients, for years.
Traditional multi-currency account solutions often involve long, laborious onboarding processes during set up, with ongoing resources needing to be allocated to ensure all banking relationships are maintained appropriately.
Virtual IBAN accounts, however, offer an alternative that provides more control, increased efficiency, and a much simpler implementation process.
What is a virtual IBAN account?
A virtual IBAN (also referred to locally as a Virtual Account) is an IBAN (International Bank Account Number) reference issued by a bank to allow incoming payments to be rerouted to a different, physical bank account.
Virtual IBAN accounts, dedicated sub-accounts that are linked to a master account, can be used to send and collect payments worldwide, allowing businesses to extend their value chain to provide settlement services to its global customers.
From the customer’s point of view, a virtual IBAN works in exactly the same way as a regular IBAN bank account – once they make a payment, their funds will end up in the physical bank account linked to the virtual IBAN.
What are the benefits of virtual IBANs?
Accepting and sending international B2B payments can often result in companies incurring a large number of transactional fees. Virtual IBANs offer companies the same facilities as a traditional settlement account, facilitating the reconciliation process, allowing businesses to transact with ease on a global scale, however, they reduce the complexity and costs involved in opening and managing a physical account.
Virtual IBAN accounts provide a wide variety of benefits for banks and payments businesses, and their customers. The use of these accounts allows financial institutions to hold a regulated master IBAN account with dedicated virtual IBANs allocated to each of their customers, aiding settlement and reconciliation.
A virtual IBAN provides payments businesses with a multi-currency, multi-jurisdictional banking solution without the need for several different banking relationships, while giving them the look and feel of having a local banking presence.
They are a representation of normal accounts, where clients can instruct payments to any other accounts. For example, a UK-based payment service provider could offer local virtual IBANs to their customers without having to open an office, or obtain a licence there.
The account set up process for virtual IBANs is faster than traditional, physical bank accounts, and can be done in bulk. Additionally, due to the way in which virtual IBAN accounts are structured, with unique sub-accounts for each customer, KYC is improved and AML risks are reduced thanks to the clear segregation and improved transparency of funds.
Find out more about Banking Circle Virtual Accounts for Payments businesses and Banks
Banking Circle clients can offer international business bank accounts to their customers with Banking Circle virtual accounts. For Banks and Payments businesses who want to be able to easily accept and settle payments worldwide, including same day settlements for SEPA payments, get in touch with a member of the team at Banking Circle to find out more.