How Multi-currency Smart IBANs are Changing International Banking

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Whether you’re an Ecommerce retailer serving customers as far as South Carolina, South America, and South East Asia, or a local manufacturer outsourcing raw materials and services from various parts of the globe, you know how costly currency conversion fees and international payment fees can get. 

And if you do your international banking transactions via the traditional route, chances are, your bank may only be accepting payments in euro. That’s why when your customer sends payment in Russian rouble or Japanese yen, your bank could either reject the payment or convert it at exorbitant fees.

You may already be all too familiar with the high costs associated with international payments. Or maybe you’ve been ignoring the costs so that it doesn’t irk you that much. But it’s about time you open our eyes to these exorbitant costs and see what you can do about them.

When your customer sends you payment from abroad, do you know the exchange rate used for the currency conversion and other fees that are going to be subtracted from the amount being transferred? Yes, you can always ask Google for the mid-market rate for your currency pairing. Your bank may not necessarily be using that rate though for the conversion of your receivable. They may instead be adding a markup to the actual mid-market rate and retain the balance for themselves.

To give you a picture of how the amount you could be losing to currency conversion, let’s look at this illustration.

Let’s say your customer is sending you $1,000 to your euro account in Finland. Assuming your Google search tells you that USD1 equals 0.85 euro. This means that you ought to expect €850 for your $1,000. However, the bank’s exchange rate is 1USD = €0.76. This means to say that you would only be getting €760 minus other fees that the bank charges. The €90 difference goes to the bank.

Imagine if the amount your client is paying you is $5,000 or $100,000. Think of the difference your bank will be keeping and the amount you are losing.

What if you could receive payments from anywhere in the world in any currency for a lower cost? Thanks to smart IBANs, you can save as much as 80% in currency conversion fees and international payments.

Developed in the past two years to refine the way international businesses operate and manage their currencies, smart IBANs identify the incoming payment and make sure that the original currency and value of the payment is preserved. By doing so, it gives the control back to you to either convert or send out the payment.

 

 

So what is a Smart IBAN?

To understand what a Smart IBAN is, first, let’s review what an IBAN is.

International Bank Account Numbers (IBANs) are used as a standard for banks around Europe in processing international payments to ensure the safe and swift transfer of your money to its destination.

An IBAN is a unique set of numbers that identifies your own bank account. This combination of numbers reveal your country, bank, and your account which are useful in locating one particular bank account from the millions of accounts all over Europe. All countries that use IBANs (the EU, Switzerland, Norway, Hungary, and Liechtenstein) adhere to a standard format of writing IBANs.

To give you an idea, this is an example of how an IBAN looks like:

CH93 0076 2011 6238 5295 7.

Let’s deconstruct this IBAN and interpret what it says:

CH - Country Code for Switzerland

93-  used to validate an IBAN and differs from one account to another

00762 - bank identifier 

011623852957 - bank account number

0076 2011 6238 5295 7 - BBAN (Basic Account Number)

We just explained what an IBAN is. A Smart IBAN is your ordinary IBAN made smarter. With a smart IBAN, you can receive payments from over 170 countries, in more than 40 currencies, and hold the original currency balance in the account. 

For example, using the same IBAN you use to receive Hong Kong dollars, your smart IBAN will receive the Hong Kong dollars and hold the balance in Hong Kong dollars rather than convert it to Euros or US dollars. You then have the option of using any of the balances to either directly pay your suppliers and employees, or convert it yourself. 

 

 

 

How Do Smart IBANs differ from Traditional Bank Accounts

When it comes to receiving payments, traditional bank accounts are inflexible. You can only receive payments in euros. So what happens when your customer sends a payment in Singapore dollar or Russian rouble? The bank will either convert the payment at exorbitant fees or simply reject it. This can be greatly frustrating and costly to the business.

Full flexibility is what sets Smart IBANs from traditional bank accounts. With a Smart IBAN, you can flexibly manage your international payments and currencies without having to worry about currency conversion fees and bounced payments. By identifying the incoming payment and ensuring that the original currency and value of the payment is preserved, Smart IBANs give the control back to the business by giving the options to either convert or to send out the payment.

What Can You Do with a Smart Bank Account?

  • Have a named business bank account for SWIFT payments
  • Have one IBAN to receive payments from 200+ countries in 30+ different currencies and manage your account online, and hold the original currency balance in the account.
  • Do bulk transfers and payouts to 170+ countries
  • Use it for SWIFT wire and SEPA transfers
  • Enjoy low-cost currency conversions

 

 

Which Businesses Can Benefit From Smart IBAN?

  • Import/export businesses managing international payments in various currencies
  • Ecommerce businesses that want to manage thier own currency conversion to enjoy better conversion rates than those provided by Mastercard/VISA.
  • Businesses that manage between €100,000 and €10m a month in international payments and currencies.

 

 

Why Trust B2BPay for Your International Banking

B2BPay is one of the pioneers in offering virtual bank accounts. Since 2015, this multi-awarded Finnish company has been garnering these accolades:

  • BBVA Bank - Fintech 4 Companies Prize
  • EU-Startups Best Pitch
  • EXEC Fintech Conference - Best New Fintech Startup
  • BAI Global Banking Awards - The Best Solution for SMEs
  • The Best Fintech in Finland 2019
  • 14 Fintechs to Watch in Europe 2020

With B2BPay’s Smart IBANs, international banking is made cheaper, swifter, and smarter for businesses doing cross-border transactions and handling multiple currencies.

  • Barclays
  • Techstars
  • Nestholma
  • Nordea
  • Tekes
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