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Virtual IBANs: Everything You Need to Know

Faster, cheaper, and with more functionalities: virtual IBANs are the solution for businesses looking to simplify their payments processes.

All bank accounts have an International Bank Account Number (IBAN). This standardized international numbering system of 34 alphanumeric characters is what financial providers anywhere in the world use to identify your bank account. IBANs have been around since the 90s and they have become a vital tool for sending and receiving money between accounts across borders. However, like other legacy systems designed before the massive growth of e-commerce and online banking, traditional IBANs are not ideally suited to the needs of today’s businesses.

What is a virtual IBAN?

This is where “virtual” IBANs come in. Rather than direct transactions to a physical bank account, virtual IBANs direct transactions to online accounts. Like their traditional counterpart, virtual IBANs can be used to send and receive payments worldwide to enable businesses to extend their services to global customers. From the customer’s side, their virtual IBAN account functions the same as their regular IBAN—they can send and receive payments and transfer funds to and from their linked physical IBAN account.

Virtual IBANs: the benefits

Although they act the same as their traditional counterparts, virtual IBANs have several advantages for businesses.

Account setup is easier

Virtual IBANs remove a lot of the bureaucracy of setting up a traditional bank account. As many business owners know, applying for an account with a traditional bank is often a lengthy process and there are several requirements you must meet. But this isn’t the case with a virtual IBAN account from an online provider. For example, virtual IBANs don’t require you or your business to reside in the same country as your account provider, meaning you can hold multiple virtual accounts in different countries.

Increased functionality

Virtual IBANs have more functionalities. They offer a multi-currency, multi-jurisdictional banking solution for foreign exchange (FX) and payments organizations without the need for a different banking relationship in each country. For example, businesses can direct payments into separate virtual IBAN accounts in local currencies that are controlled from a master IBAN account. Creating sub-accounts for regions, product ranges, and even customers in this way makes managing customer payments, settlement, and reconciliation much easier.

Significant cost-savings

The cost-savings using virtual IBANs can be significant, with potentially 20 per cent saved in fees. The main driver for these savings is that, while many traditional banks charge high FX and transfer fees for individual payments, virtual IBAN providers have different pricing models. This is especially useful for online businesses operating in several global markets. 

Advanced security

Virtual IBANs are stored in the cloud in encrypted, redundant servers for a highly secure service with little risk of fraud or downtime. Virtual IBANs also help businesses to comply with AML (Anti-Money Laundering) and KYC (Know Your Customer) regulations thanks to end-to-end transparency and funds segregation, with some financial providers even offering compliance-as-a-service to customers as well.

Choose a virtual IBAN provider to accelerate payments and business growth

With a virtual IBAN, you have a multi-currency and multi-regional banking solution that doesn’t need several banking relationships to manage. For businesses, this simplifies and speeds up transactions with many payments having same-day or even instant processing.






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Sean Salloux

Sean Salloux


Sentinel Digital

Member since

02 Feb 2021


London, New York

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