E-commerce is a fast-growing industry, especially during today’s digital age where almost everything is online now. Similarly, there is an increasing number of businesses that have either expanded their operations to the internet or they are exclusively an e-commerce company. If your business belongs to either of the mentioned categories, you may want to consider using virtual IBAN.
A virtual IBAN is an account number that is used by companies to route payments to a physical bank account. With online banking becoming a popular alternative to going to a physical bank, virtual IBANs are increasingly becoming an important banking technique used by online merchants that support cross border transactions.
- Effective management
Setting up virtual IBANS is a convenient option for you if your business handles foreign exchange (FX) Management or payments in multiple currencies- it is an efficient way to manage the incoming and outgoing payments. You can set up many virtual IBANs, each dedicated to a specific currency, a specific merchant (B2B), or a client (B2C). These virtual IBANs will, then, route the collected payments to your main (physical) bank account. Managing multiple bank accounts is a time-consuming process and often costly.
There are certain costs associated with having a bank account; e.g. maintenance fees for checking accounts. Previously, if your business were to operate internationally or dealt with international transactions, you would need to open multiple bank accounts. Costs of one bank account may not be high but collectively could be substantial. Virtual IBANs collect your payments and send them to your main account, saving you high overhead costs as you will only be paying the maintenance fee for a single account.
- Ease of setting up an account
With traditional banks, there are lots of prerequisites for opening a business account; sometimes lengthy processes can make it complicated and confusing. For example, one of the requirements for opening a business account is that you, the business owner, have to reside in the same country as the bank where you have your account.
You can avoid this issue by setting up a virtual IBAN and switching to online banking. Virtual IBANs often enable businesses to instantly open new accounts quickly and easily without lengthy application processes or the requirement for local residency.
Virtual IBANs are beneficial for digital first companies that need to quickly and easily open multiple accounts in different currencies and do not want the hassle of opening multiple accounts with different banks. This flexible solution can also offer much better payment reconciliation whilst being more cost efficient.