In recent years, the banking industry has changed dramatically. Businesses have more options than ever before thanks to technology, which makes it easier for them to access banking services and customize them to meet their business needs.
Online merchants who need to receive money from their acquirers and send funds to partners and suppliers across the globe can benefit the most from alternatives to traditional banking services.
IBANs (International Bank Account Numbers) have been around for over 20 years. By utilizing 34 alphanumeric characters, virtual IBANs allow banking systems to direct money to the correct country, bank, and branch of a physical bank. In addition, it includes other data that facilitates the movement of funds. Traditional IBANs, however, may not be ideally suited to the needs of online merchants as they were invented before eCommerce gained traction.
What Is A Virtual IBAN?
Since more and more business is conducted online, an alternative to the traditional IBAN has emerged. The virtual IBAN is a number that does not correspond to a physical account. Rather, it allows incoming payments to be routed to an alternative account at a physical bank with its own IBAN. The same features are available with virtual IBANs in addition to a number of other benefits.
Benefits Of A Virtual IBAN Account
The popularity of accessing banking services online has increased considerably in recent years. This shift includes virtual IBANs, which are helpful to online merchants in terms of setup speed, ongoing management, and functionality.
The absence of a physical branch allows virtual IBAN accounts to avoid a number of traditional bank account opening processes. The account holder does not need to physically reside in the country of the bank offering the virtual IBAN in order to apply for it. Therefore, virtual IBANs can be set up online quickly.
As well as simplifying set-up and implementation, virtual IBAN accounts provide merchants with more flexibility regarding how they manage their accounts.
A traditional IBAN represents one single bank account to which all funds will be deposited. However, merchants today may receive payment from multiple countries or acquirers, across multiple products and services. The use of virtual IBANs makes B2B payments more convenient and efficient. By routing funds to different accounts, merchants can better track business performance and remain compliant.
Creating separate sub-accounts and statements would help you to keep track of each payment and make financial management easier.
Choosing The Right Virtual IBAN Provider
The existence of many organisations licensed to act as financial institutions can provide virtual IBANs, but may not offer the same level of assurance as traditional banks.
Virtual IBAN accounts offer a variety of benefits to FX and payments companies and their customers. These accounts allow FX and payments organisations to maintain a master IBAN account for which they can create and assign virtual IBAN accounts to each of their customers, which facilitates settlement and reconciliation. In certain cases, the virtual IBAN provider will store funds in segregated bank accounts, which leads to greater security than standard bank deposits.