Digital Bank Account vs. Virtual Account vs. Global Business Account – How Do They Differ?

Almost every company aiming to expand its operations internationally eventually realises that traditional international banking services are time-consuming, expensive, and frustrating. Even so, many organisations, particularly SMBs, still rely on regular banks, even for (slow and expensive) cross-border funds transfers and payments. One reason is that they lack knowledge about the other options that are available – options that are cheaper, faster, and more convenient than traditional bank offerings. These FinTech innovations like virtual bank accounts, digital bank accounts and global business accounts offer greater flexibility, scalability and cost-effectiveness, which can be powerful forces for expansion and growth.

This article will explain the differences between these accounts, and how companies can leverage them to seamlessly manage and optimise their cross-border payments and collections.

Disrupting Traditional Banking with Digital Banking

A digital bank account is frequently confused with a virtual bank account, although the two concepts are not the same.

Most banks now have a digital function, allowing their customers to do everything from checking their balance to making interbank cash transfers online – all without stepping into a physical bank branch. Digital banking offers greater convenience to customers, and allows them to save time – time that they can use in better ways to focus on their customers and to grow their business.

Digital Banking is now a term used to describe any banking activities that are completed using a digital device — whether it’s a desktop computer or a mobile banking app. People save online using saving apps, pay for their coffee by scanning a code, and companies pay their staff with app internet banking. These are all forms of digital banking.

Taking Disruption Several “Virtual” Steps Further

Most international and cross-border sellers suffer trying to create a bank account in the buyer market , facing high fees that eat out the profit and loss of precious time in going to market. In order to receive payments from the overseas buyers they go through a tedious process of creating and providing documentation relevant to the banks in the buyers market, with a lot of back and forth admin and verification process. There is a significant waiting time for approval and in the end the result might be a failure.

This is where virtual accounts, a newer and even more disruptive form of FinTech-driven banking, comes into picture. Virtual accounts differ from other forms of digital banking in that they only exist online - they have no physical presence within a community or a country.

Virtual account enables companies to receive foreign currency payments into their Virtual Account with consistent foreign currency conversion pricing for receivables, eliminating price padding and high conversion rates from merchant processors, online marketplaces, and customers.

By streamlining the number of physical accounts that companies operate across the globe, virtual accounts transform the cash management process for businesses.

Virtual Accounts offered by fintechs like the Wallex Global Collection account are designed to allow businesses to get paid globally as if it was a local payment. They can receive account details in foreign lands like the US, United Kingdom, Europe and accept foreign currency payments from their customers to an account held in their name - all without a local area presence.

For businesses and ecommerce vendors who are expanding to new markets, this would be a hassle-free alternative to securing local bank accounts in each country of operation.

Moreover, activation of the accounts is instant, receiving payments into the virtual accounts is free, logs and notifications are provided on the status of each payment and funds can be converted back to your local currency at very competitive exchange rates . The account is completely online to open, operate or maintain with no need to visit any branch, or fill out complicated paperwork.

Global Business Account: A Boon for Cross-border Business Expansion

A global business account works in a similar fashion to a digital bank account and virtual account, but we like to think of them as the upgrade to both digital and virtual accounts to a more cost effective, robust package of solutions for growing businesses.

With a Wallex global business account, companies are able to manage all their needs like paying suppliers or staff, moving money across borders, perform local currency conversions, maintain liquidity in multiple currencies and set up virtual accounts in countries and currencies that matter most to their business.

Benefits of a Wallex business account compared to traditional bank driven business accounts are :

• Free to open and maintain. No minimum balance
• Online secure platform , regulated in Singapore , Indonesia and HongKong
• Faster transaction processing times
• Cheaper and transparent fees depending on services used
• Competitive exchange rates on currency conversions
• Access to virtual accounts in multiple currencies
• Dedicated account manager

Additional services may include extension of credit services , virtual cards etc. which enhance the ability of the business to operate exclusively using a global business account.

It is important to look carefully into the method of paying in and payout supported to ensure that these work for your business. e.g. some business account providers only support international payments to other parties on their network or have additional charges for making payments outside their network. Such hidden charges can quickly add up decimating any benefit you may have gained from opening a business account.

Wallex is licensed and regulated in major Asian markets of Singapore, Indonesia and Hong Kong, making it easier and safer for Asian enterprises to do business abroad. All customer funds are safeguarded and kept in a customer segregated account which is separate from all other internal operations accounts. Wallex operates within a very strict framework both for compliance and for the safety of funds in their custody.

Wallex: More than Money Transfer for Your Business

At Wallex, we’ve created a powerful alternative to traditional banking. Our Global Business Accounts are designed for businesses who have their eyes set firmly on international growth. Unlike most other accounts, Wallex doesn’t charge any setup fees. There are no monthly minimum fund thresholds to keep, and no monthly or annual fees—ever.

You’re able to create a Global Business Account in minutes. Once approved, you’re able to send, receive, and hold funds in up to 47 different currencies. So when you’re ready to streamline your international transaction needs, you can book a demo here.