The last two decades have seen a significant evolution in online payment services; one such system is a virtual account. The benefits include rationalization of accounts and simplified cash management structures. Here is a guide on virtual accounts (VA) facilitated by payment service providers to merchants.
What is a Virtual Account?
Virtual accounts, a type of online payment service, are used by customers to optimize their working capital. It provides a single view of your cash and management of liquidity, payment and receivables management, etc. The information collection method is easy as virtual account numbers can be tracked against the payer’s credentials provided by the merchant. A VA is created and assigned to your paying customer, whether it is a main distributor or a buyer. When you have at least fifty such payment sources, a virtual account will help you differentiate the payments from each source. The payments made are automatically directed to the master account.
Virtual Accounts: How Does It Work?
You can create any number of virtual accounts based on your business requirements. A part of the account number is customized and assigned to each of the paying customers. As the customers make a purchase, they are directed to the payment page to complete the transaction. The payment service provider assigns a dedicated virtual account to the merchant and then to the customer. As the payment is made, it is deposited into the merchant’s account, and the bank receives sales information. Compared to traditional internet banking, virtual account management expands the nature and scope of online banking. They provide clients with the platform and functionalities to manage their liquidity on a self-service basis.
Benefits of Virtual Account Management
Virtual account management helps businesses get a single view of pooled bank accounts that are virtualized into thousands of bank-active virtual accounts. The automated self-service online payment solution is made available on the premise or on the cloud, which allows you to streamline the customer experience to match the requirements. The benefits are available to businesses of all sizes and types. The payments and collections are channeled through a single account, making payments on behalf of (POBO) or collecting cash on behalf of (COBO) multiple group entities. Businesses can rationalize their accounts and simplify cash management structure through the advantage of a single external account.
Optimal utilization of payment solutions by payment service providers is the key to the success of your business.