Virtual IBAN: What they are, how they work, and how to get one

Key takeaways

• Virtual IBANs allow your business to create multiple sub-accounts linked to one master account. This means you can track payment by client, region, or currency, without having to open physical bank accounts.

• Virtual IBANs mean faster processing and reduced costs. Watch as payments reconcile and match in real-time, avoid forced conversions, and drastically reduce admin work. All while accessing transparent fees and holding funds in more than 60 currencies.

• Quickly set up your virtual IBANs through Airwallex with 0.5-1% markup and seamless accounting software integration. You’re one step away from comprehensive financial management.

If you’re hoping to expand into international waters but you cringe facing forced currency conversions, high and ambiguous fees, and arduous and tedious paperwork associated with opening multiple physical international bank accounts, then this blog is for you.

We’re here to help you understand virtual IBANs, whether you need one, how to get one, and what they actually mean for your business.

What is a virtual IBAN?

A virtual IBAN (International Bank Account Number) is a sub-account linked to your central bank account. You can create multiple virtual IBANs and link them all together so funds are centralised, but you can issue specific IBANs for certain payees, clients, or regions, making it easier to track payments.

Virtual IBANs differ from traditional IBANs in that there are no in-person services, as they’re not a full bank account. You also usually access them via fintech platforms (like Airwallex) rather than a regulated bank. With a traditional IBAN, you have one per account, and you’ll find you’re limited to one currency for each account.

How virtual IBANs work

For the sender, nothing looks different; they receive a virtual IBAN just like they would any IBAN. They make payment in the same way, just the funds route to your master bank account. And although funds are pooled in the same master account, you can track them individually.

You can issue different virtual IBANs for different clients, projects, currencies, etc. The list goes on. You can build your virtual IBAN structure as you see fit.

Unlike with traditional IBANs, reconciliation with a virtual IBAN is automatic. You’ll see payments match in real-time using advanced APIs (integrate your ERP for synchronisation of payment and reconciliation data, too). The virtual IBAN solution matches incoming payments to the correct department, invoice, or recipient. Which means less manual workload and fewer payment errors.

And, if you’re sending and receiving payments in multiple currencies or from different jurisdictions, thanks to a virtual IBAN, you can send, receive, and hold funds in multiple currencies from a single IBAN account.

Benefits of using a virtual IBAN for businesses

Let’s explore a handful of these benefits:

Simplified cash flow management

By issuing specific IBANs for different currencies or customers, you consolidate multiple payment streams into one master bank account. This removes the need for multiple bank accounts, making it easier to manage and forecast cash flow. And with payments reconciling in real-time, you have instant and accurate cash flow visibility, always.

Faster, more transparent international payments

Because virtual IBAN payments use local payment networks (instead of SWIFT), you have greater visibility when it comes to fees and FX rates, and the payment is processed quickly. With traditional IBANs, cross-border payments can take days without visibility into fees, creating a lot of unnecessary uncertainty for both sender and receiver.

Easy tracking of incoming funds by client or region

By assigning unique IBANs to different clients or regions, it becomes much easier to accurately report on revenue from those clients or regions. For example, if you’re a French organisation that exports to multiple European countries, i.e., the UK, Germany, or Italy, maybe the ability to allocate a virtual IBAN for each means you can easily attribute payments for each region.

Reduced administrative costs and errors

Automatic reconciliation of transactions means fewer human errors and time wasted manually reconciling payments. This means you can close accounts faster and free your finance team up to focus on more add-value tasks like forecasting, resource allocation, or financial analysis. And because it’s all automatic and payments are more accurate, you can build better financial relationships with suppliers, customers, and employees, too.

Supports global growth without opening multiple bank accounts

If you want to take your French business international, taking advantage of virtual IBANs is a frictionless way to expand into new territories without the hassle of opening and maintaining multiple physical bank accounts. Instead, you create a virtual IBAN, assign it to your customer based in Germany, let’s say. They receive local bank details, which helps build trust and payments settle without delay, improving everyone’s experience.

Who can benefit from a virtual IBAN?

You could benefit from a virtual IBAN if you fit one of the following categories:

SMEs expanding into international markets

Expanding into international markets is exciting, but wait, what about all the admin work when opening local bank accounts? The process is time-consuming. But instead of opening multiple physical bank accounts and going through all that faff, you can create virtual IBANs as and when you need them, assign them to specific clients or regions, and all of a sudden, you can track payments effortlessly and start trading in new markets immediately.

E-commerce companies selling cross-border

If customers want to buy your products, why should location stop them? Having a virtual IBAN means you can now accept customer payments in their preferred currencies without hassle. You’re elevating the international customer experience while simplifying reconciliation, and you can track client payments, too. Triple win.

Freelancers and digital businesses

Operating a digital business means the world is truly your oyster - no borders, just opportunities, but with international clients comes high and unpredictable FX fees. Opening a virtual IBAN, although it doesn’t completely eliminate FX fees, it helps reduce unnecessary conversions. So when a client pays you, you can choose to hold the money in that currency rather than forcibly convert it.

Enterprises managing multiple subsidiaries or regions

If you manage multiple entities, you’ll have many customers across the organisation, which means having them all pay into separate local accounts or directly into one master account can cause financial visibility issues (not to mention the admin work required to maintain all these local bank accounts!). Instead, assigning virtual IBANs for different regions can help you keep track of all payments, giving you increased financial oversight while improving operational efficiency.

How to get a virtual IBAN in France

1. Through payment service providers and fintech platforms. Any fintech platform that offers local account details for SEPA or Eurozone payments can help you set up virtual IBANs. Providers can include platforms like Airwallex, Payoneer, and Revolut Business.

2. Requirements: KYC, business verification, compliance checks. Know Your Customer (KYC) identity and business checks mean you submit your business registration documents, business activity details, proof of address, etc. This process is to verify your business.

3. Setting up multi-currency accounts linked to the IBAN. Once the platform approves you, you’re good to go. Start issuing specific virtual IBANs all linked to your multi-currency business account.

Example process with Airwallex

1. Sign up for an Airwallex account online. After providing your business details and completing KYC verification, you’ll be approved (all being well) usually in one to three business days.

2. Once approved, you can open an Airwallex multi-currency account. This will become your master account where all virtual IBAN transactions land.

3. Now it’s time to create your virtual IBANs. Generate as many as you need and assign to different regions, business units, or customers.

4. Share your virtual IBAN details with customers and watch payments land in your master account.

5. Operate from one central account across multiple entities in multiple currencies. Convert, hold, or transfer funds as you need.

Why Airwallex is the best choice for a virtual IBAN

Easy setup for French businesses

Opening a traditional bank account in a different country is complex and requires a lot of manual administrative work. With Airwallex, account setup is quick and easy, which means it’s even easier to scale your French business into new markets and accept payments from both international and domestic clients. Our digital-first customer experience streamlines the entire process, helping your finance team focus on more add-value business tasks instead of wasting time maintaining physical bank accounts.

Multi-currency IBANs supporting 60+ currencies

Our virtual IBANs support more than 60 currencies. So you can hold, send, and receive funds however you want, avoiding forced currency conversions. Currency coverage spans EUR, GBP, AUD, HKD, USD, and more. So if you deal with international suppliers and customers, our multi-currency virtual IBANs will be useful for you.

Market-leading FX rates and transparent fees

Our FX rates have between 0.5% and 1% markup on interbank rates, and our fees are completely transparent (no hidden fees here), which is essential when managing cash flow for a multi-entity. Plus, we offer real-time foreign exchange rate locking through APIs, so you can budget and control costs even closer.

Integrated with accounts, cards, and global payment solutions

Our platform offers more than just virtual IBANs; we integrate with market-leading accounting software, ecommerce platforms, and payment gateways to offer customers a comprehensive financial management solution that enhances financial visibility, spending control, and expense management, while enabling you to convert currencies, track every transaction, and reduce unnecessary manual admin tasks.

Conclusion

Hopefully, you can see just how handy a virtual IBAN can be. Particularly when you want to expand quickly into new international markets. Learn more about our multi-currency support features at Airwallex or schedule a personalised product demo.

FAQs

How is a virtual IBAN different from a traditional IBAN?

Traditional IBANs need a physical bank account, whereas a virtual IBAN does not. Traditional IBANs also only allow one currency per account, but virtual IBANs allow you to manage multiple currencies from a single account.

How long does it take to set up a virtual IBAN?

When using platforms like Airwallex, a virtual IBAN can take just one to three business days to approve. This is after you complete your KYC verification and submit business documents.