The mechanics
A virtual IBAN is a routable account reference that points at an underlying physical account. Money sent to it lands in the master account, tagged to the reference it was sent to.
The bank or institution holding the master account maintains the mapping and the ledger behind it.
Where they help
Reconciliation improves dramatically. Assigning a unique reference per customer removes the guesswork of matching incoming transfers to invoices.
Marketplaces, platforms and subscription businesses use them to segregate client flows without opening a physical account for every user.
The limits to respect
A virtual IBAN is not a separate legal account and does not by itself provide segregation of client money. Safeguarding obligations still apply at the master account level.
Regulators also expect clarity on who the named holder is, particularly where the reference carries a different country code from the underlying account.
Have a question about your own setup?
Our team can walk you through the options for your business and markets.
Get in Touch