Nium completes acquisition of Ixaris

12th April 2021

Are virtual payments the future for business banking?

Virtual cards and iban
Christian Joseph Agius

Christian Joseph Agius

Director of Global Financial Partnerships

From our personal to professional lives, the past twelve months were nothing if not a period of dramatic digitisation. But as the world prepares to return to a new normal, will a physical-first approach to business banking infrastructure rebound? Our Director of Global Financial Partnerships Christian Joseph Agius weighs in.

When “the only constant is change” businesses must always strive to maximise efficiency and focus resources on their core business. Payment technology that offers a lower cost, more security, and opportunities for automation have a critical role to play in this.

As experts in payments, Ixaris has helped businesses from online travel agents to airlines, insurance companies, media houses and BNPL providers to optimise (and profit from) their payments. We work with our customers to uncover new revenue streams, lower their cost of payments and facilitate new mechanisms to reduce their risk. We’ve even introduced them to new and innovative payment distribution channels.

Based on over two decades of helping companies profit from payments we know one thing for sure: the need for physical plastic cards to manage employee expenses, and the separation of physical bank accounts to manage inflows/outflows, is and will remain a thing of the past.

Today, virtual payment instruments enable businesses to manage their inflows and outflows more efficiently, cheaply and securely. And it all starts with a single bank account number that can now also be supported on a multi-currency basis. This single account may have:

  • virtual cards to manage outbound payments
  • virtual cards to manage inbound original credit transfers
  • virtual IBANs to manage inbound accounts receivables
  • virtual IBANs to manage outbound payments

Both virtual cards and virtual IBANs can deliver several key (and often overlooked) wins for an organisation.

Direct bottom-line impact

There are two ways to impact your bottom-line: either by generating new revenue streams or by cutting costs (often by reducing back-office load). Virtual payments tackle both:

  • Virtual cards and virtual IBANs have all the same benefits as a physical card or physical IBAN — but generating a virtual card or a virtual IBAN carries no cost.
  • Virtual corporate cards are ideal when there is no relationship between the buyer and supplier. For example, the buyer is paying instantly, so the supplier is paying a higher cost of processing. In this case, the buyer can obtain a portion of this revenue-share from its own bank.
  • Inbound virtual IBANs enable businesses to automate their receivables by allocating a dedicated virtual IBAN for each of their own customers or projects. With virtual IBANs, received funds are quickly allocated.
  • Virtual cards and virtual IBANs can enable quick reconciliations of a business’ outbound payments since the card reference number or virtual IBAN can easily be used as a unique reconciliation element.
  • Segregation via virtual cards and virtual IBANs (for both inbound and outbound payments) can facilitate a holistic and much easier overall reconciliation of your business.

Payments on demand

There is no waiting time between requesting and receiving a virtual card or IBAN. Creation and activation are instant and can even be done on the fly, or in batches of multiple virtual cards at once. Securely emailing virtual card details to suppliers is fast and seamless, too.

New levels of flexibility

Payment virtualisation brings with it a new level of flexibility for businesses managing their fraud risk and security. Let’s consider virtual cards and virtual IBANs separately in this regard:

Virtual IBANs

If your business manages inflows and outflows from a single bank account, it’s challenging to manage who is paying or where your money is going. With dedicated virtual IBANs at both ends of the payment flow, you can easier manage:

  • Which bank account you want to accept funds into for a specific customer
  • Which of your employees are allowed to pay certain suppliers (by linking the supplier directly to a specific outgoing virtual IBAN)
  • Monitoring, limiting and blocking of inbound and outgoing payment flows from specific customers or to specific suppliers
  • What happens in your bank account by precisely mapping each inbound virtual IBAN to your customer list, and each outbound virtual IBANs to your supplier list

Virtual cards

The customisation options and capabilities for virtual cards are nearly endless. How many times have you heard of someone worrying about losing their corporate card, or faced with financial losses due to stolen card data? With virtual cards, you can:

  • Limit specific cards to be spent at specific merchants and/or in specific countries to reduce your risk of fraud
  • Control card spending limits, loading value and transactional counts allowed per card
  • Set automatic loading and unloading instructions per card, based on time/dates or specific events occurring
  • Control your card validity and expiry to manage risk based on card usage expectancy
  • Issue cash-less closed-loop cards that can only be redeemed at your own e-commerce website, which are especially useful for better managing voucher programmes

Greater protection

If your business shares its primary IBAN, you are exposing your organisation to the possibility of receiving funds from unidentified sources. By contrast, funds funnelling through your business to/from a dedicated virtual IBAN are easily identified.

Virtual cards are ideal when there is no relationship between the buyer and supplier, as they offer protection to both parties. The buyer is protected against supplier default and can recover the funds via card schemes’ established dispute processes, and the supplier is guaranteed settlement as soon as the funds are authorised by the issuer. These guarantees give both buyer and supplier confidence to extend their reach to new business partners.

Ready to go virtual?

Our payment optimisation specialists are here to help you navigate the world of virtual cards and virtual IBANs. Get in touch to schedule your complimentary consultation.

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