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How virtual IBANs benefit global platforms

Explore the benefits of virtual IBANs, an essential tool for simplifying payment operations, improving local payment experiences, and fighting IBAN discrimination.

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Virtual IBANs - also known as virtual accounts -  come with several solutions to common issues that platforms face, especially those with a large or international customer base. For platforms looking to improve customer experience with cross-border payments that feel local, virtual IBANs present a digital and cost-effective alternative to traditional banking methods. 

Let’s dive in and get ready to: 

  • Learn how virtual IBANs differ from traditional IBANs, making them a better alternative
  • Explore the benefits of virtual IBANs, including automated reconciliation and the offering of local payment experiences
  • Understand how you can simplify your payment operations
  • Learn how Mangopay can help you redirect your efforts from sorting out payments to growing your business with more local payment experiences that drive operational efficiency.

What is a Virtual IBAN, and how does it differ from an IBAN?

Virtual IBANs or virtual accounts serve the same function as traditional IBANs, allowing for sending and receiving payments and have been developed by the payment industry. They are generally described as digital representations of a master bank or payment account that allow for the segregation of funds and easier transaction tracking - something that a single IBAN can’t enable. One or more virtual account numbers can sit on top of master accounts, which means all the funds are pooled together on that master account, but each transaction will have a unique account number reference. 

In terms of customer experience, using a virtual account is just like using a regular payment or bank account. When users send a payment, it lands in the master account linked to that virtual account. They won’t notice the difference, but on your end, it’s easier to identify and track the origin of the funds.

What are the benefits of virtual IBANs?

Businesses opt to issue virtual IBANs for several compelling reasons:

  • Virtual IBANs require using a banking infrastructure that is more cost-effective than a card infrastructure, especially for high-value transactions and B2B payments.
  • With automated reconciliation, you simplify the task of matching pay-ins with corresponding invoices. 
  • Eliminate the need to maintain multiple accounts and reduce extra fees and errors.
  • Virtual IBANs can mirror the form and structure of traditional local bank accounts, giving your customers an undisrupted payment experience.

Automate reconciliation and reduce payment operations efforts

Managing payments can be challenging when operating with a single IBAN, as reference data with each payment is required to identify the payment’s origin. If the payee forgets to add the required payment info or gets it wrong, the burden falls on your operations team to determine where the money came from and reconcile the payment.

By allocating a unique virtual IBAN to each payment, you circumvent the need for additional reference data. Each payment speaks for itself, showing who it's from right away. It's a simple change that can make life much easier on the operations side.

Operate truly locally by offering local payment experiences

Seeing a localized IBAN can increase users’ trust in proceeding with the transaction, thereby improving their overall payment experience and your customer conversion rate.

Moreover, with virtual IBANs, we are addressing the critical issue of IBAN discrimination - the practice where a bank or a business refuses to accept an IBAN for Euro payments or direct debits simply because the bank account is from a different European country. We enable buyers and sellers to enjoy fair payment experiences on their favorite marketplaces and platforms. In this matter, Mangopay promotes an inclusive cross-border payments environment, helps online platforms increase their loyal customer base, and builds user trust.

Virtual IBANs at Mangopay

With our flexible payment infrastructure, platforms can create unlimited IBANs on demand to benefit from automated reconciliation and offer their users local payment experiences. Here’s how things work at Mangopay. 

  • Create as many IBANs as you need through our API
  • Attach IBANs to your e-wallets
  • Money sent to this IBAN goes straight into the wallet – no extra steps
  • They are available in multiple currencies

We’re also offering a flexible solution that can be tailored to multiple business models. Retail platforms can give each customer a special virtual account for easy payment tracking, gig platforms can make it easier for freelancers to get paid directly, and subscription services can make recurring billing smoother. These are just a few instances of how virtual accounts can be adapted to improve business operations and customer experiences.

Mangopay is expanding Virtual IBANs coverage to reach new borders. Contact us to learn more. 

Frequently Asked Questions

Are virtual IBANs secure?

Yes, virtual IBANs use the same security measures as traditional banking systems, ensuring that all transactions are encrypted and securely processed.

Can virtual IBANs be used for both domestic and international payments?

Virtual IBANs are suitable for handling both domestic and cross-border transactions, making them a versatile tool for businesses operating globally.

Can Virtual IBANs be used by individuals, or are they only for businesses?

Virtual IBANs are primarily used by businesses, especially those handling international transactions. However, individuals who engage in frequent international transactions or who operate sole proprietorships might also benefit from using virtual IBANs.

How do virtual IBANs compare to other solutions like multi-currency accounts?

Virtual IBANs are unique identifiers linked to a master bank or payment account, allowing for transaction and funds management across different currencies and countries. Multi-currency accounts are physical or digital bank accounts that allow the account holder to send, receive, hold, and manage funds in multiple currencies in a single account. 

How can I get started with using virtual IBANs for my business?

You should contact a payment services provider that offers virtual accounts solutions, like Mangopay. We can guide you through the setup process.