What is a Virtual IBAN?

4 min read

Every hour of the day, funds worth billions of dollars are transferred around the world. While many of these transactions are conducted using IBANs, a financial identifying tool that is more than 25 years old, a growing percentage of transactions now find their way through the global banking network by use of virtual IBANs, also known as vIBANs. As dedicated channels for the flow of international payments, vIBANs permit businesses and individuals to operate a multi-currency, multi-jurisdictional banking solution without the need for several different banking relationships, whilst giving them the look and feel of having a local banking presence. Read on to find out more about this unique fintech payments tool.

What is a VIBAN?

VIBAN stands for Virtual International Bank Account Number, and a vIBAN is an identifier used to make or receive international bank payments. VIBANs function as virtual sub-accounts for a physical master bank account. They provide dedicated channels for the transfer of funds between businesses and individuals in different countries. As well as giving improved oversight of overseas payments and receipts, vIBANs simplify the collection or dispersal of funds in foreign currencies and can reduce risk, transaction errors, rejected payments, and transfer delays across borders. A virtual IBAN holder may have multiple unique vIBANs that send payments to a single master account.

What Does a VIBAN Look Like?

A vIBAN looks the same as a regular IBAN - comprising up to 34 letters and numbers and including information about the account holder’s bank, the country their bank is in, and a combination of other account details to route funds to the recipient’s master bank account.

How Does it Differ from an IBAN?

Whereas a regular IBAN is matched to only one bank account in the world, and it funnels all overseas payments into that account, a virtual IBAN is a sub-account of the central master account. VIBANs may be dedicated to individual clients, suppliers, or projects, and established to manage a variety of currencies. VIBANs cannot function without being linked to a physical master bank account identified by its IBAN.

What Are the Benefits of VIBANs?

VIBANs can provide a multi-currency, multi-jurisdictional banking solution without the need for several different banking relationships. As well as helping the recipients of international funds to readily identify payors, and make payments to overseas suppliers easier, vIBANs allow businesses to automatically convert foreign currencies to their local currency before they hit their central bank account. This can reduce banking costs, delete the need to juggle multiple accounts, and bring a smoother reconciliation process to the account holder’s international payments.

Who Might Use VIBANs?

Ideal for businesses and individuals engaged in cross-border trade, vIBAN accounts can be set up in a variety of currencies and can be allocated to clients, suppliers, even individual projects, to provide a direct and immediate flow of funds. VIBANS are a popular choice for:

  • Import/export businesses
  • Foreign exchange trading
  • E-commerce
  • Commodity trading
  • International real estate operations
  • Aircraft and ship charter

VIBANs: The Fintech Solution for Today and Tomorrow

Businesses and individuals that separate their international payments with vIBANs will have better insight into their financial activity and may see a reduction in the time it takes for payments to process. As the pace of technology accelerates and the world becomes ever more connected, the need for greater speed and accuracy of cross-border payments will only increase. vIBANs are the fintech solution to this need.

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