Today, most companies collect payments by direct transfer to their main bank account. However, there is an alternative for greater efficiency and security: thevirtual IBAN. Increasingly popular with large companies, this tool facilitates banking operations while strengthening fraud protection and simplifying accounting processes.
In this article, find out how the virtual IBAN works, its advantages, and how to use it effectively to optimize cash receipts.
1. What is a virtual IBAN?
Definition and operation of virtual IBANs
A virtual IBAN (also known as a virtual account) is a unique bank account number used to facilitate the management of incoming payments. Unlike traditional IBANs, the virtual IBAN is not linked to a single physical bank account. It is a virtual intermediary account: flows collected on this account are automatically redirected to the company's main account.
Virtual IBAN solutions are mainly used to simplify payment reconciliation and optimize cash management. Eachvirtual IBAN is assigned to a customer, transaction or service. They automatically identify each transaction and the issuer of the transfer. These solutions are therefore particularly popular with companies handling large volumes of payments.
Virtual IBAN solutions are provided by banks, BAAS (Bank as a Service) or fintechs such as Fintecture.
2. The benefits of virtual IBANs
The virtual IBAN bypasses some of the limitations of conventional bank transfers. These advantages make it a particularly popular financial tool for corporate treasurers.
Protection against IBAN fraud
By disclosing the IBAN of your main bank account, you expose yourself to the risk of bank identity theft. The IBAN can be misused to make fraudulent payments, particularly through direct debit mandates.
By using virtual IBANs, you can collect transfer payments without disclosing the IBAN of your company's bank account. What's more, virtual IBANs cannot be hijacked. For example, virtual accounts generated within the framework of the Intelligent Fintecture can only be used to collect funds. They can only be used to make payments.
Automatic payment reconciliation
The virtual IBAN overcomes one of the main drawbacks of conventional bank transfers: reconciliation. The identification of the payer and its attachment to an invoice are often carried out manually by accounting teams. For companies that collect a large volume of transfers, these time-consuming tasks have a detrimental effect on productivity. What's more, they temporarily block the logistics chain: the launch of production and/or the delivery of an order often depend on the correct receipt of payment.
With virtual IBANs, each customer has a dedicated IBAN that automatically identifies the issuer of the payment. This speeds up payment processing and enables the company to know in real time whether an order has been paid for, thus reducing shipping or production lead times.
Find out how Alcopa Auction uses the Intelligent Fintecture Transfer (virtual IBAN solution) to speed up its collections and take advantage of the benefits of instant transfers. Read the case study
Simplified cash management
For companies with a high volume of payments, the virtual IBAN makes it possible to centralize funds in an intermediate account. This process consolidates incoming payments into one or more daily transfers to the main account. In this way, movements on the main account are reduced, simplifying banking operations while maintaining a clear overview of cash receipts thanks to detailed reporting.
It is important to note that the frequency and time of disbursement depends on each service provider. With Fintecture, funds are disbursed by default on D+1 via a single feed, but this parameter can be customized to suit the needs of each merchant.
A complementary solution to Open Banking
L'initiation of payment by credit transfer is rapidly expanding. Thanks to account-to-account payment without IBAN entry, it offers a real alternative to traditional bank transfers. However, it still has a number of limitations, not least the need to use online banking, which is problematic for BtoB customers. As a result, it cannot replace all bank transfers on its own, and needs to be complemented by virtual IBAN solutions such as the Intelligent Transfer to cover 100% of use cases.
3. How does a virtual IBAN work?
Creating and managing virtual IBANs
Virtual IBANs are created automatically by payment service providers. Most banks offer "packs" of virtual IBANs, which the company then allocates and distributes to its customers (or to specific groups as required). This allows great flexibility in transaction management, but requires intermediate processing.
In the case of Fintecture Intelligent Transfer, thevirtual IBAN is generated automatically at the time of payment, based on parameters defined in advance. This "real-time" approach simplifies the experience for the customer, who doesn't have to wait for a specific IBAN to be generated. By default, the generated IBAN is linked to a customer (based on his/her e-mail address). This allows the payer to reuse the generated IBAN for future purchases from the merchant. However, this setting can be customized: the virtual IBAN can be generated per order, per company, per subsidiary, etc.
Using the virtual IBAN to collect payments
From the customer's point of view, the use of a virtual IBAN changes nothing compared to a classic IBAN. The customer can register it with his bank and make a standard or instant transfer, according to his habits , throughout the SEPA zone. Once the funds have been received, they are automatically transferred to the company's main account, with no need for manual intervention.
The main advantage here is that customers don't need to adapt to a new customer journey. The use of virtual IBANs limits resistance to change and covers 100% of use cases in both BtoC and BtoB.
4. Intelligent Transfer: a virtual IBAN enriched with value-added services
The Intelligent Transfer from Fintecture goes beyond simple virtual IBANs. This solution includes advanced features that enhance the user experience while automating payment management. Here's an overview:
Advantages of Smart Transfer for payers
With Intelligent Transfer, IBAN display is automated, dynamic and intelligent: it is generated in real time for a new order, and recognizes the existing payer (who will be displayed the same IBAN). This immediacy makes it an ideal payment solution for both online and point-of-sale environments.
In addition, the payment interface is designed to facilitate the entry of the transfer. IBAN information can be easily copied and pasted, and the payer can download a slip summarizing the transaction details, to make it easier for him to send a payment request to his bank, for example.
Real-time payment tracking
Unlike a traditional virtual IBAN, the payer can track the execution of his Fintecture transfer. Thanks to a link accessible by e-mail, they can consult the status of their payment in real time, just like tracking a parcel. They no longer need to contact the merchant to find out whether their payment has been received. This feature reduces payment-related incoming calls by up to 80%.
Benefits of Smart Transfer for businesses
Automatic, real-time reconciliation
Smart Matching , a reconciliation algorithm, automatically matches the transfer received with the corresponding order in real time. Fintecture returns clear statuses, directly usable by business teams: validated, overpaid (to easily orchestrate a refund), underpaid (to request a top-up or quickly identify a dispute). This powerful technology also makes it possible to process complex cash receipts, particularly in the case of bulk payments (payments grouping together several invoices).
Decentralized support for autonomous teams
With conventional virtual IBAN systems, only those people within the company who have access to the bank account can access payment information. With Intelligent Transfer, transfer tracking is no longer restricted to the accounting department. From the Fintecture back office, customer-facing teams (sales, customer service) can monitor the progress of credit transfer payments via the Fintecture console. They can generate payment links, restart payments or make reimbursements independently (depending on the rights attached to their profile).
The best protection against transfer fraud
The Intelligent Fintecture transfer includes an anti-fraud system that complements the banks' own. All flows are analyzed in real time by our TMS (Transaction Monitoring System) to identify suspicious payments. Companies particularly exposed to fraud can activate additional options:
- Premium Fraud Shield: this option (reserved for key accounts) automatically and proactively blocks fraudulent payments according to customizable rules to strike the best balance between security and conversion.
- the SCA+ option, which enables strong authentication (code entry) before displaying the virtual IBAN
Conclusion
Virtual IBANs overcome the limitations of traditional credit transfers, particularly in terms of reconciliation and tracking, while preserving customers' payment habits.
The Intelligent Transfer developed by Fintecture goes even further. It incorporates additional services to automate andoptimize the payment value chain and better combat credit transfer fraud. Contact our Payment experts to find out more about its benefits and to discover concrete use cases.
