Virtual IBANs: Removing Friction in Cross-Border Payments

As a high-risk business owner, it can often feel like you’re swimming against the tide when it comes to getting approved for a high-risk merchant account. You know that you have a great product or service, but it can be difficult to find a payment processor willing to take on the risk associated with your business.

One of the biggest hurdles you’ll face is finding a way to accept and receive international payments. If your business relies on cross-border sales, you know that accepting payments from anywhere in the world is crucial.

But what if there was a way to get around this problem?

Introducing virtual IBANsIn this guide, we’re going to take a look at what they are, how they work, and how you can use them to remove friction from your cross-border payments.

Let’s get started.

What is a virtual IBAN?

A virtual IBAN is a payment method that allows you to receive cross-border payments without the need for a traditional bank account. Instead of using a physical bank account, you’ll be able to generate a unique IBAN (International Bank Account Number) that can be used to receive payments from anywhere in the world.

Virtual IBANs offer a number of advantages for high-risk businesses, including:

  • Reduced fraud risk: Virtual IBANs can be used to receive payments from anywhere in the world, which means that you’re not as susceptible to fraud.
  • Lower costs: There are no monthly fees or minimum balance requirements associated with virtual IBANs.
  • Faster payments: Virtual IBANs allow you to receive payments faster than traditional bank accounts.
  • Greater flexibility: You can generate as many virtual IBANs as you need, which gives you the flexibility to receive payments from multiple countries.

Let’s say you own an online gambling company and want to offer your customers the ability to pay in Euros. Traditionally, you would need to open a bank account in Europe in order to receive payments. But with a virtual IBAN, you can generate a unique IBAN that can be used to receive payments from anywhere in the world. This means that you can avoid the hassle and expense of opening a bank account in Europe and receive payments faster than if you were using a traditional bank account.

How virtual IBANs work

Virtual IBANs work by routing payments through the SWIFT network. SWIFT is a global network connecting banks and financial institutions worldwide. When you receive a payment from a customer, the funds are first sent to a virtual account that is linked to your virtual IBAN. From there, the funds are transferred to your real bank account via the SWIFT network. The whole process is automated, which means that you don’t have to worry about manually transferring funds from your virtual account to your real bank account.

The Friction: Explained

According to SWIFT, 2%-5% of payments are subject to an inquiry or investigation, leading to a delay before payment can be completed.

The main reason for this is that traditional cross-border payments can be slow and inefficient. When you send a payment from one country to another, the funds have to be converted into the local currency, which can take days. And if there are any errors or discrepancies, the payment can be delayed even further.

Some additional issues with traditional cross-border payments include:

  • High fees: Banks typically charge high fees for cross-border payments, which can eat into your profits.
  • Long payment terms: Payment terms can be as long as 30 days, which can put a strain on your cash flow.
  • Complex documentation: The paperwork and documentation required for cross-border payments can be complex and time-consuming.

The Solution:

This is where virtual IBANs can help. By routing payments through the SWIFT network, virtual IBANs can help to speed up the payment process and reduce the risk of delays and errors.

In addition, virtual IBANs offer greater transparency and visibility into the payment process. With a traditional bank account, you might be unable to track a payment’s status or see where it’s being held up. But with a virtual IBAN, you can see exactly where the payment is at every step of the way. This transparency can help reduce the frustration of waiting for a cross-border payment to arrive.

When it comes to rules and regulations, cross-border payments can be a minefield. Different countries have different laws and regulations, which can make it difficult to comply with all of them. This is another area where virtual IBANs can help. Because virtual IBANs are not tied to any one country, they offer greater flexibility when it comes to compliance. With a virtual IBAN, you can choose the jurisdiction that best suits your needs. For example, you might choose a jurisdiction with more favourable tax laws or one that offers greater protection from fraud.

Virtual IBANs can also help to reduce the risk of incorrect data fields, as the fields are generated automatically. Let’s say you own a forex brokerage that allows your clients to trade in multiple currencies. With a traditional bank account, you must manually enter the client’s currency and amount into the relevant fields. But with a virtual IBAN, all this information is generated automatically, reducing the risk of errors.

Final Thoughts

As more businesses enter the global market, the need for virtual IBANs will continue to grow.

Gone are the days when outdated banking infrastructure could slow down or even stop global commerce. The modern global financial ecosystem is complex and ever-changing. 

As businesses utilise virtual IBANs to make and receive payments, they are future-proofing their cross-border payment options and gaining a competitive advantage.

At Capitalixe, we work with leading banks and financial institutions to provide our clients with the best possible rates and terms for their cross-border payments. From virtual IBANs to blockchain-based solutions, we are constantly innovating to make cross-border payments faster, easier and more efficient.

If you’re looking for a better way to make cross-border payments, we can help. 

Get in touch today to find out more about our services.


 Multi-Currency IBANs: How They Can Help Your Business Grow

The first thing that you do when you learn about a business or have to deal with it is that you look it up. The entire world is online and so are businesses. When you set up a business online, there is always a possibility of finding clients that are not necessarily from your country. Now as foolish as it may sound to have to give up a client because of geographical locations, it is something you can easily evade by being smart and opening an offshore account that accepts multiple currencies.

Gone are the days when offshore accounts were opened to launder money and evade taxes.  They are now a way for businesses to legally access accounts that have more security, work with various currencies and get access to important payment systems carried out globally.

The Concept and Origin of Multi-Currency IBANs

A multi-currency IBAN account is an international bank account that diverts transactions in diverse currencies into one principal account and currency.

Back in the day, every country in Europe had its own specific way of organizing payment information while conducting international bank transactions. This diversity in the systems left room for a lot of mistakes and errors. In 2014, the European Union got together and harmonized its method of identifying bank information which is now known as the International Bank Account Transfer Number (IBAN). The IBAN system is now a part of other countries too, that are not limited to the EU. Virtual IBAN accounts are becoming more common by the day, as companies and individuals that have proper documentation, can open IBAN accounts online, without even stepping into an IBAN-favoring country. The rise in virtual bank accounts has led to the sudden meddling of borders in finance, globally. The clients can reside in one country and do business in other, while their bank account is located elsewhere.

It is common to sell products and services in several markets in a progressively globalized and multifaceted world. Multi-currency IBANs can be very fruitful for these businesses as they allow the merchants to collect international payments in diverse currencies and stock them in one centralized account.  This allows business owners to make the world their marketplace and benefit from the transactions on a global level.

Benefits of Virtual Multi-Currency IBANs

There are multiple ways by which multi-currency IBANs can help a business. Let us take a look at them:

  1. Avoid Currency Conversion Tools- When you are paid in a different currency, the internal currency conversion tools make a significant dent in your income. Multi-currency IBANs enable you to keep different payment gateways as they combine all your international payments in a single account. They allow you to accept and offer online payments in several foreign currencies. This way you can receive payments in multiple currencies from the various countries you deal in. The money received in the particular currency stays as is, with a mere fee for foreign exchange.


  1. Cost-effectiveness- If companies use multi-currency IBAN accounts to set up numerous virtual accounts, like physical accounts, they can exclude the substantial foreign exchange (FX) and transfer expenses linked with altering each payment compared to typical bank accounts. Not just the purchases, they make it very convenient for the companies to deal with settlements. Using multi-currency IBANs lessen the time it takes to process payments, helps with making payments in bulk, and provides prospects to trade with different countries.


  1. Extra Account Security- One of the most important reasons for keeping money in the bank is Security. It is imperative to keep the financial documents of an organization safe. Stored in redundant, encrypted cloud servers, multi-currency IBANs are safer and less likely to be misrepresented. They have very strict rules for KYC (Know Your Customer) and money laundering. Secure IBANs help provide various payments for foreign exchange and offer a solution to holding different accounts that may or may not be safe.


  1. Global Yet Local- Multi-currency IBAN accounts empower you to trade in any part of the world on your own terms. Your currency is the language you speak and it hardly leaves scope for any confusion. You get what you charge and there is immense clarity between the trader and the buyer, despite the regional difference. These accounts make you feel like you are trading locally.


  1. Insights on Spending- You never know where you would strike gold when you deal in different countries. The profits from one country may be much higher than in another. The multi-currency IBANs enable you to record and observe profits on a currency-by-currency basis and from that, you can ascertain how much you need to spend in a country, according to the returns you would get.


  1. No Multiple Relationships- Payment businesses using a virtual IBAN can access multi-currency, multi-jurisdictional banking without needing multiple bank relationships, as all your money would stay in a single account, and you would not have to deal with different banks pressurizing you to be on cordial terms with them, giving you more time to focus on the services you are looking forward to providing in your business.


  1. Saves Time- When you have a multi-currency IBAN account, you save a lot of time as you have to no longer worry about managing the reductions that are bound to happen when you are dealing with a different currency. Without a multi-currency IBAN account, you are bound to waste a ton of time while figuring out the deductions, but with it, you have one less item to worry about on your plate.


  1. Transactional Fees- International payments often require companies to suffer by cutting out a significant chunk from the payment received, as a part of transactional fees. Virtual multi-currency IBANs deal with companies akin to a local account. You save a lot of money by not having to pay for services you will not be using, for example, insurance, credit cards, etc. All this hassle can be easily avoided by keeping multi-currency IBAN accounts so that a more affordable getaway is created for all the companies involved in the transaction.


Parting Note

Multicurrency IBANs are a great way of taking your business to a global level. The world is getting smaller by the day through the power of the internet and it is for this reason that multicurrency IBAN accounts are gaining so much popularity, especially in developing countries. When a business from a developing country gets paid by a business from a developed country, the difference in the currency is significant and it can help you a lot, to grow your business and to make a mark online. Multicurrency IBAN accounts offer a hassle-free solution to most of the problems that are likely to arise when dealing with an international business or a client. They keep your money safe and help you avoid unnecessary expenses and thrive in an economy on your own terms.

 Contact Us For Banking Help

 At Capitalixe, we specialize in helping our clients who are often deemed as “high risk” find the perfect banking and payment solution for their needs. We do this by leveraging our network of over 50+ financial institutions, EMI’s and banks worldwide. Our goal is to help save you time and take the pain of finding trustworthy and suitable solutions away from you.   

Feel free to reach out to us for a complimentary consultation. We will be more than happy to help you.