BTL 781 - Virtual Account Number (VAN)

 

The Banking Tutor’s Lessons

BTL 781                                                                          06-05-2025

Virtual Account Number (VAN)

In the context of bank savings accounts, a Virtual Account Number (VAN) is a system-generated, unique identifier that is used in place of a traditional account number for certain transactions.

VAN acts as a digital address, linked to a primary bank account, allowing for secure and traceable payments without revealing the actual account number.

Virtual accounts are primarily used to facilitate payments, especially for businesses that receive transactions from multiple sources. They help in streamlining the process of receiving funds and tracking the source of each payment.

When a payment is made to a virtual account, the funds are automatically credited to the underlying primary bank account, which can be a savings account. The virtual account number is not the same as the actual bank account number.

Virtual accounts offer several advantages, including:

Security: They mask the original account number, protecting it from potential misuse.

Traceability: They allow for easy tracking and reconciliation of payments, identifying the source of each transaction.

Efficiency: They can automate the process of receiving and processing payments, saving time and effort.

Transparency: Virtual accounts provide clear visibility into cash flow and transaction details.

Virtual accounts are commonly used for:

E-commerce transactions.

Recurring payments (e.g., utility bills).

Customer payments.

Employee payrolls.

Virtual accounts are distinct from traditional bank accounts in that they do not hold any funds themselves. They are essentially a digital gateway or a passthrough account, directing payments to the underlying primary account.

Sekhar Pariti

+91 94406 41014