At the moment, we are seeing a steady growth in eCommerce and online marketplaces. However, the success of these businesses depends heavily on their payment infrastructure.
Digital transformation in the financial services industry is accelerating cross-border payments, but expanding your business internationally isn’t as simple as setting up an e-commerce site and waiting for orders to come in. To accept payments, you must be compliant with regional regulations and have a working relationship with local banks. Yet in this real-time or near-real-time environment, friction that can result in enquiries or investigations still exists, slowing down the payment process. The solution to this friction may be virtual IBANs.
The Source Of Friction
SWIFT estimates 2%-5% of payments are subject to an inquiry or investigation, leading to a delay before payment can be completed.
Various factors contribute to such friction, including internal and external ones. The payment rules and regulations for each country where a correspondent bank sends payments may be different. Understanding the differences in requirements outside of your local market demands expertise. Clients may also encounter problems if data fields are filled with incorrect information. There is no single, global regulator overseeing cross-border payments, so there are many different formats and peculiarities. This fragmentation makes it difficult to automate cross-border payments.
The Tools To Fight Friction
By implementing dedicated platforms such as OpenPayd, financial institutions can reduce friction in cross-border correspondent payments. A platform of this type can make it possible for a bank to route payments rapidly and efficiently to the appropriate correspondent. Subsequently, they can automatically populate that payment with the correct data and format so that it can be processed directly.
What Are Virtual IBANs And How Can They Help?
Adding virtual IBANs to your financial toolbox streamlines and simplifies the process of providing customers with trusted payment options while complying with regulatory requirements. A virtual international banking account number (virtual IBAN) is a bank’s reference number that is used to route payments to a (non-virtual) IBAN/bank account.
The use of virtual IBANs eliminates many inefficiencies between traditional banks and online payments. They enable merchants to untangle the complexities of traditional global banking relationships and overhaul their payment systems.
Advantages Of Using Virtual IBANs
- Seamless global transactions
The use of virtual IBANs allows organizations to create multiple banking relationships and effectively replace multiple regional payment processes with a single, digital one. With virtual IBANs, B2B payments are more seamless and intuitive, making them a far more convenient alternative to other options currently available. They are similar to peer-to-peer and customer-to-business payments due to their ease of use.
- More time for operations
When an organization moves into a new region, traditionally they have to establish a relationship with a bank. Of course, this is expensive and time-consuming. By using virtual IBANs, this time-intensive process can be eliminated and human resources can be devoted to more important tasks, such as growth opportunities.
- Alternative payment solutions
To improve sales, businesses must have multiple payment options. With virtual IBANs, businesses can create additional virtual IBAN accounts with alternative bank accounts to use as backup payment options.
The growing convergence between online banking and payments is bringing us closer to an interoperable, secure global transaction ecosystem. Virtual IBANs have quickly become a necessary part of payments within this growing ecosystem since trust, security, and regulation are vital whenever funds are exchanged.
By utilizing virtual IBANs, these businesses are taking part in this modern, global financial ecosystem and eliminating the limitations imposed by traditional, outdated banking infrastructure. By adopting virtual IBANs for your global B2B payments, you will simplify transaction processes, save time, cut costs, and possibly unlock the next growth opportunities.