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Everything You Need to Know About Virtual IBAN

As a business owner with intentions of going global, having virtual IBANs is important. This article explains how virtual IBANs can benefit your business.

3 mins read
12th February 2024
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Leatherback

Leatherback

Leatherback Content Team

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You have just decided to go global and expand to a different market in another country, like Europe, for example. 

However, you're burdened with how to handle bulk international payments. Serving customers in Europe means they'll need to pay for your services, which might involve local financial institution accounts.  This takes a long time for the money to reach you and can also be expensive due to currency exchange rates. You might end up losing customers or getting frustrated in the long run. 

Sadly, this is a common challenge that many business owners face when deciding to go global.  Thankfully, technology makes international transactions easier. With virtual IBANs (International Bank Account Numbers), your business can have special virtual bank accounts in different countries.

As a business owner with intentions of going global, having virtual IBANs is important, because it helps your company have special bank accounts in different countries.

This article explains what virtual IBANs are and how they can benefit your business.  We'll also guide you through the steps to get them quickly and easily.

What is an IBAN?

An IBAN (International Bank Account Number) is a series of digits used to identify accounts when sending money internationally.  This code makes international money transfers easier by ensuring that funds go to the right bank and account.

When sending money abroad, you need the recipient's IBAN, their name, and address. Your financial institution uses the recipient's IBAN to direct the money accurately.  The recipient's financial institution checks the IBAN to make sure it's correct. If it is, the money is deposited into their account. 

If there's an error or the IBAN doesn't match any account, the transfer may not go through or could be delayed.

What is a Virtual IBAN and what does it look like?

IBAN and vIBAN are usually used interchangeably because they both serve to identify who's sending and receiving money.  However, virtual IBANs provide extra flexibility and convenience for businesses, especially for international payments.  

Unlike a regular IBAN tied to a physical financial institution account, a virtual IBAN is like a digital version of an account.

A virtual IBAN also lets you create several unique IBANs from one bank account. You can assign these virtual IBANs to specific clients, projects, or departments, making it easy to manage money and keep an eye on how it flows.   Money received through a virtual IBAN usually goes to the main financial institution’s account, so all the funds end up in one place.

This code saves you from having the trouble of traveling to different countries if you wish to open a financial institution account personally, especially when you're expanding your business globally.  This is because each virtual IBAN would have a unique local financial institution account number specific to that country, making it easier to receive and send funds needed for operations in these locations. 

The format of an IBAN can differ from country to country, but it typically comprises a country code consisting of 2-3 letters, followed by 2 check digits, and then a sequence of alphanumeric characters that encode the bank and account information. 

The country code serves to specify the country where the bank account is located, while the check digits play a role in confirming the correctness of the IBAN by verifying its integrity.

How do Virtual IBANs work? 

When money is sent to your virtual IBAN, it goes through the payment infrastructure of that specific country. 

For instance, at Leatherback, we provide you with a multi-currency feature that allows you to create an international currency account and instantly get a virtual IBAN. Here's where the magic happens: we partner with local financial institutions in those countries.

Instead of the money getting stuck in a local financial institution, we use our partnerships to reroute the funds to your central account. This means you can receive money in various currencies without needing to maintain physical local bank accounts in each of those countries. 

It's like having a special address in each country for your money, even though your real 'home' is with us. This makes international transactions simpler, faster, and more cost-effective, especially for businesses operating globally.

To get your unique virtual IBAN, create a business Leatherback account here and start enjoying seamless and quick cross-border transactions. 

What are the benefits of Virtual IBANs?

Virtual IBANs offer numerous advantages for businesses. Here, you'll discover in-depth explanations of why opting for a Virtual IBAN could be a smart decision for your company. 

  • Global expansion: If your business is spreading its wings to a new region, virtual IBANs can make your financial life a lot easier.  Let's say you're setting up a shop or serving clients in another country; you can create a virtual IBAN specifically for that place.

This means you can get paid just like a local business, manage your money flow better, and avoid the headache of juggling different local bank accounts in every country.

  • Privacy and security: If your virtual IBAN is ever compromised, your primary account stays safe, reducing the risk of significant financial losses.  Plus, they help isolate specific transactions, safeguard against phishing, and offer controlled access to trusted individuals. 

Not only does this protect your sensitive financial information, but it also ensures the smooth flow of your business activities. 

  • Simplified payment processes: Virtual IBANs can simplify payment processes by providing your business with dedicated bank account numbers for specific purposes or partners.  This simplifies accounting, as each virtual IBAN is associated with a particular transaction or business activity. 

For example, you can assign a virtual IBAN for a particular client, project, or type of income, making it easier to track and manage funds related to that specific aspect of their operations.

  • KYC compliance: KYC (Know Your Customer) regulations are designed to prevent financial crimes such as money laundering and fraud. Using virtual IBANs can assist you in complying with KYC requirements. When you create a virtual IBAN, it typically goes through a KYC process to verify its identity. This can involve providing documentation and information about the business. 

Once verified, the virtual IBAN can be used for transactions, and it's easier to demonstrate compliance with KYC regulations, as the necessary business details have already been vetted.

  • Risk management: Virtual IBANs help you keep your business finance organized for different things, making it easier to track. If one part of your business has money problems, it won't affect your whole business. 

You can also control your spending better and make it harder for people to misuse your money. If you have to follow strict money rules in your industry, virtual IBANs help you do that by keeping different types of money separate.

How to own a Virtual IBAN with Leatherback? 

Think your company can benefit from virtual IBANs? If so, you're in luck! Obtaining a virtual IBAN is super easy with Leatherback.  Simply sign up as a business owner by clicking here. 

For a visual guide to the account creation process as a business owner, watch the videos here. Once your account is successfully created and approved, your virtual IBAN will be issued to you instantly. 

This means you can start effortlessly receiving and sending money from various locations around the world. 

For more information on anything you need to know about sending and receiving money on  Leatherback, contact us at help@leatherback.co. Stay in touch and keep abreast of financial tips and resources via  LinkedIn, Instagram, Facebook, and X.

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