In today’s online era, sending and receiving money in all currencies is much easier than ever. This leads to “virtual bank accounts”, which must be owned by people working with different currencies.
An example is someone who works online to work on projects between countries, where that person receives payments in different currencies. To facilitate the process of receiving and sending money, a virtual account is needed so that payments can be received later local bank account.
In this article let’s learn what a virtual bank account is and why you need one.
What is a Virtual Bank Account?
You may have guessed what a virtual bank account with name alone is. These are “live”, managed bank accounts on the Internet that you cannot access by physically visiting the bank building.
You may not use a virtual bank account as you would a local bank account as you normally would. For example, you might not be opening a virtual bank account as a savings, retiree, or ISA account through a virtual bank service. However, this bank is only in charge of storing and moving money in different currencies.
This is not their strongest feature. What’s impressive about virtual banks is that they give you the physical address and bank code for each currency. Some services will provide you with these details up front, while others will ask for an ID check first.
Either way, once you have these details you can use them to send or receive payment as if you had a bank account in that country. For example, because I am in Indonesia, I can open a US virtual bank account and work to receive payments in dollars without registering through an official bank. Where if I use a local bank then I can’t receive these payments directly from clients without a virtual bank account. I am missing additional features offered by the local bank, but it doesn’t matter; I just want to use the account to send and receive money between US dollars and even other currencies.
Using a Virtual Bank Account
When you use a virtual bank account, it is usually for one of two reasons: You send or receive money in a currency that is different from your own.
Receiving Money to Virtual Bank Account
Receiving money is usually one of the main reasons for creating a virtual bank account. If you receive money from abroad regularly, you can save a lot of money using it.
For example, suppose you are selling something overseas, and the client wants to pay you. They can only pay by bank transfer, and although you can provide them with your local bank details, you know that the bank will charge a large deduction in transaction fees for offshore transactions.
To avoid this, you can create an account with a provider that has low currency conversion fees. Then, you provide your clients with your virtual bank account details in their currency. They pay into your virtual account, which is subject to minimal fees (if any). This is because your client bank and virtual bank in their currency are in the same country.
You use a virtual bank service to convert or convert a client’s currency into your own currency. If you choose a service with minimal costs, and usually very little. The money will leave your foreign account and enter your local bank account.
You can then arrange transfers from your virtual account to your local bank. Your bank sees transactions in your home currency as coming from banks in the same country, so it doesn’t treat them as foreign transactions. As a result, you will get a hefty pay without a big cut.
Sending Money from a Virtual Bank Account
In a similar vein, you can use this service to reduce the cost of sending money overseas. Sometimes banks will deduct a sizeable amount when sending money overseas; if your local bank is not friendly with foreign transfers, you can use a virtual account.
In this case, sending money is the opposite of the above. You send money from your bank to a virtual account in your currency, which is counted as a domestic transaction. You then convert the money and send it in your recipient’s currency. Some virtual bank services allow you to send directly from your domestic currency and perform all conversions to save time.
Examples of Using Virtual Banks
As someone who receives money from overseas sources, I make good use of the virtual bank services to ensure that my payments are smooth and cheap. Having said that, I want to talk about what I use and how it helps me, to show how this account works in real life.
When receiving money from businesses overseas or between countries, I like to use Payoneer and also PayPal. It is the best virtual bank that can accept payments from multiple currencies and bridge payments for remote workers, making the process much easier. Payoneer prohibits the use of personal accounts, so you only need to have this account to send or receive payment for work. And even the advantage of Payoneer is that there is a card that you can use to withdraw your balance directly through a joint ATM.
The person who pays you needs to set up Payoneer in the end so that it works with you, so I don’t use it for all transactions; however, those who use it allow me to accept foreign currency for less than bank transfer or PayPal.
For personal use and for clients who don’t use Payoneer, I usually use TransferWise. It has a really good conversion rate, which comes in handy when I need to send money to another country.
The other is PayPal, because it has been around longer than Payoneer it is more popular with Indonesian users. PayPal is also very effective in accepting payments and also very fast for withdrawing funds to local banks.
Banking in a Virtual Bank
If you frequently send and receive foreign currency, be aware that Paypal is not the only way. There are many alternatives to Paypal, and a virtual bank like Payoneer is one of them. There are many options, so choose the one with the focus that suits you best. However, for my advice, use Payoneer when you have trouble creating a PayPal account, because Payoneer is also very well known in various countries and this is a virtual bank account which is also popular among freelancers.
Another plus is that Payoneer is not as sensitive as PayPal, where if you are at PayPal you have to be careful when using the account and don’t make many mistakes. This can cause your account to be banned and your money not disbursed smoothly.
And that’s a brief explanation of Virtual Bank Accounts and their benefits. If you are interested in creating a virtual bank account to receive payments from abroad, then I recommend creating one Payoneer or PayPal. Good luck, good luck 🙂