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A Virtual IBAN Role in B2B Payments

Updated: Mar 8, 2023

What is a Virtual IBAN?


If you’ve ever wondered what a virtual IBAN is or how to get one, then please keep reading.

A virtual IBAN is a form of bank account issued by a bank or electronic money institution that permits the account owner to receive or send payments.

The virtual IBAN account will be redirected to a real bank account held by the EMI or issuing bank.

How Does a Virtual IBAN Work?

The increasing market share of online sales versus physical sales is driving the popularity of virtual IBANs.Also, the B2B Payments expanse across borders and currencies is setting the stage to capture more online sales.

A virtual IBAN is a reference number given by the bank that allows payments to be routed to a bank account. Getting a virtual IBAN is an easy and quick online process for many international companies, and it can be used to make cross-border payments, streamline those payments, and comply with necessary requirements that span the B2B and eCommerce digital economies.



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For clients, a virtual IBAN is the same as a traditional IBAN account with a bank; once they proceed with a payment, the money will be received in a physical receiving party’s account linked to the virtual IBAN.

Moreover, the virtual IBANs can be customised or even multiplied for a company or group of companies to match certain requirements. A virtual IBAN has the same facilities as a traditional IBAN but can be an effective tool to reduce payment fees.

On top of that, a streamlined back-office process, a certain degree of automation via API, tailored pricing for each client, and much more can be achieved by simply banking online.

For eCommerce businesses, where acquirers are asking for bank accounts able to collect settlements in at least a few currencies, this can be hard to obtain. Together with receiving B2B payments in multiple currencies, there are currency exchange or hedging needs that must be met in order to maintain healthy business operations.

How to Get a Virtual IBAN

A virtual IBAN is intended to create access to payment services without the cost and complexity of a traditional bank account, where administrative and reconciliation costs are high.

You can get a digital bank account with virtual IBANs and all named benefits from an industry-leading payments specialist that Epico Finance works with. Reach out to us to get a list of the best providers on the market.

Our payment partners are able to offer settlement accounts to merchants, financial institutions, international corporations, and SME’s. The Epico team has experience supporting various industries with international payments and foreign exchange solutions.

You can find more information about our service offerings here.

Moreover, there are a few things to consider before searching for and signing up with any virtual IBAN providers out there. Not all of them are equally good, and it is important to choose wisely as they are going to handle your money.

In order to help, we have put together a list of tips for you in our article "How To Choose Payment Service Provider [Full Guide]"

What Are The Pros And Cons Of A Virtual IBAN?

The standard virtual IBAN is a phantom account for a normal bank account. This way, it is able to replicate having multiple accounts in various jurisdictions and currencies while only having one actual bank account. In addition, the owner of virtual IBANs is the same owner of the actual bank account, and payments are routed to the actual bank account.

Moreover, virtual IBANs make the management of multiple currencies easier. Because each different currency can have its own virtual IBAN. Also, the owner of a virtual IBAN is able to receive different account statements for each virtual IBAN.

On the other hand, virtual IBANs cannot replace real multi-currency accounts in different jurisdictions. If a customer or supplier wishes to transact within one country's borders, the virtual IBAN associated with an actual account in a different jurisdiction might not be able to assist.

Conclusion

All in all, a virtual IBAN is a cheap and quick solution for organisations doing business in multiple markets. It is easy to create, maintain, and account for.




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