Virtual IBANs: Why Your Business Needs Them

All bank accounts have an International Bank Account Number (IBAN). First introduced in the 1990s, IBANs underpin the process of sending and receiving money across borders. This standardised international numbering system allows financial providers anywhere in the world to identify your bank account. However, this legacy system was designed before the exponential growth of e-commerce and online banking, meaning traditional IBANs are not ideally suited to the dynamic needs of modern businesses.

Virtual IBAN (vIBAN) accounts offer an agile alternative that provides a simpler implementation process and greater control and improved efficiency of your international payments.

What is a Virtual IBAN?

A virtual IBAN (International Bank Account Number) is a non-tangible account that enables your business to send and receive money internationally hassle-free, by allowing incoming payments to be redirected to one central physical bank account.

Virtual IBAN accounts for business can be viewed as dedicated sub-accounts linked to a master account. They are used to send and receive payments worldwide, allowing businesses to extend their settlement services to global customers.

For customers, a vIBAN works in the same way as a regular IBAN bank account: once they make a payment, their funds are sent to the physical bank account linked to the vIBAN.

Benefits of a Virtual IBAN

Although a vIBAN functions in the same way as a regular IBAN in the eyes of the customer, it has several advantages for businesses compared to its traditional counterpart.

Easy to set up

There’s a lot of red tape associated with setting up a traditional bank account. vIBANs remove much of this bureaucracy. For example, vIBANs don’t require you or your business to reside in the same country as your account provider, allowing you to hold multiple virtual accounts in different countries.

vIBANs offer businesses access to convenient virtual accounts that connect them to the main payment systems - SEPA within the eurozone and Faster Payments within the UK. Clients can then set up as many vIBAN accounts as and where required.

Cost-effective

If your business holds multiple accounts in multiple countries it can rack up significant banking fees - account set-up costs, payment fees, and account management fees. If vIBANs are adopted, however, costs will be significantly reduced. You can use a vIBAN to create multiple virtual accounts, similar to physical accounts, eliminating the foreign exchange and transfer expenses associated with converting each payment using the traditional method.

Payments that are processed through SEPA and the Faster Payments network are more cost-efficient than normal payment channels.

Advanced security

vIBANs are stored in redundant, encrypted cloud servers for a highly secure service with little risk of fraud or downtime. End-to-end transparency and funds segregation make it easier for businesses to comply with Anti-Money Laundering (AML) and Know Your Customers (KYC) compliance rules.

Improved transaction management

vIBANs provide a multi-currency, multi-jurisdictional banking solution for international payment providers, eradicating the need for a different banking relationship in each country. For example, payments can be directed into separate vIBAN accounts in local currencies that are administered from a master IBAN account. Creating sub-accounts in this way makes managing customer payments, settlement, and reconciliation much simpler for your business.

You can access separate statements for each vIBAN, simplifying the statement reconciliation process. Not only will your business benefit from improved oversight of cash flow and currency risk management, separate statements will also enable you to easily locate each payment.

Faster transactions

Cross-border payments often stall because they are subject to checks in both territories. With vIBANs, however, the verification, settlement, and routing of payments is much faster than with physical accounts for one crucial reason: they work with just one actual account, meaning the payee appears to be in the same territory as the person making the payment. When the funds need to be transferred overseas, they can be sent in a single consolidated payment, rather than multiple smaller ones. VIBANs even make it possible to send and receive payments in real-time.

This streamlined process removes much of the friction businesses with international payment requirements typically experience.

How to Get a Virtual IBAN for Your Business

The process of obtaining a vIBAN for your business, so you can enhance the management of your international payment requirements, is quick and simple.

Step 1

Open an account with a currency specialist, like Clear Treasury. This can be completed online in a matter of minutes.

Step 2

Once the account has been approved by the provider’s compliance department, you will receive a notification that it is active.

Step 3

Once logged into your account, you can create your new vIBAN accounts. You are then ready to book FX deals and execute payments.

Get Your Virtual IBAN with Clear Treasury

Make the most of your business’s international payments by seeking the services of a currency specialist like Clear Treasury. Our seamless onboarding process allows the necessary regulatory checks to be conducted quickly and easily.

Once set up, we will assign you a dedicated account manager who can discuss your requirements over the phone or by email. In addition to helping you benefit from quick, easy, and secure transfers, they can outline the tools available to mitigate the impact of currency risk on your international payments, including forward contracts.

Open your free Clear Treasury account today for quick, secure and cost-effective international currency transfers.