Cash & Liquidity Management

Virtual accounts to business wallets: from treasury efficiency to business growth driver

Published: Jan 2019

A 24/7 digital economy is rapidly emerging, and today’s business environment requires fast evolution for digital and traditional MNCs alike. Tech and e-commerce companies seek to take advantage of the unprecedented scale and connectivity of their digital ecosystems to amplify growth. Heritage firms recognise that they must disrupt themselves with new ways of doing business or be disrupted.

Portrait of Ron Karpovich, Global Head of eCommerce Solutions, J.P. Morgan

Ron Karpovich

Global Head of eCommerce Solutions


Portrait of James McKenzie, Global Payments Specialist, J.P. Morgan

James McKenzie

Global Payments Specialist



In parallel corporate treasurers are using digital disruption to quicken their shift to strategic treasury. Robotic process automation is minimising time spent on routine and repetitive operational tasks. Artificial intelligence, machine learning and analytics are helping treasurers to gain insights that enhance their role as internal business consultants. To contribute to enterprise-wide top-line growth, corporate treasurers seek new tools to support business transformation.

Virtual accounts are one such tool, providing the functionality to set up business wallets: an increasingly prevalent driver behind disruptive business models. Virtual business wallets serve as the foundation of many commercial applications, helping to create a digital ecosystem through which companies can improve operational efficiency and improve customer relationships. Corporate treasurers can bring business wallets as a fresh idea to internal business partners to support new business expansion.

Evolution towards virtual accounts: treasury focus

In support of the need to segregate cash flows for transaction visibility and efficiency, bank solutions have evolved. Initially “virtual IBANs” allowed businesses to reroute identified incoming payments to a specified physical account while facilitating better customer cash application. The emergence of receive-on-behalf-of (ROBO) and pay-on-behalf-of account structures (POBO) went further by enabling treasurers to rationalise physical accounts. However, on-behalf-of (OBO) structures added complexity by reducing transaction-level visibility, thereby creating the need to track and reconcile intercompany positions.

Virtual accounts combine one physical bank account with a virtual reporting structure that is uniquely configured to a company’s needs for segregating cash flows to solve for all three treasury needs:

  • Account structure rationalisation.
  • Improved cash centralisation of both payables and receivables (via OBO).
  • Enhanced visibility with flexible virtual account reporting and reconciliation.

The next application of virtual account management (VAM) is the shift from an internal bank account orientation to an external commercial focus.

Next evolutionary leap for virtual accounts: business focus

Virtual accounts can be a technology-enabled tool that can facilitate new business models for future expansion. They allow the segregated reporting of transaction activity by customer and supplier relationships. This extends the benefits of VAM beyond treasury for a range of business purposes.

Forward looking opportunities:

Simplifying reconciliation for e-commerce platforms:

Born digital companies, including e-marketplaces and gig economy platforms are expanding into new markets and undergoing explosive growth. Companies can automate reconciliation using millions of virtual business wallets to generate invoice-level data across different currencies and jurisdictions. This simplifies the reconciliation of incoming customer payments to expected receipts and the management of returns and rejects at a massive scale.

Heightening connectivity in digital ecosystems:

A supplier wallet lets sellers store and track value in a virtual account that remains on a company’s balance sheet. Technology and e-commerce companies can use supplier wallets to gain visibility into supplier relationships and heighten connectivity within a digital ecosystem.

Supplier wallets let merchants pay, receive and track multiple currencies in a single wallet without any FX. This supports a seamless buying and selling experience with customer stickiness. For example, a Chinese vendor sells via an e-commerce company’s US website and buys on the e-commerce company’s European website. A supplier wallet allows the vendor to use proceeds from US sales to make purchases in Europe, incentivising the merchant to buy more goods through the e-commerce company.

The supplier wallet becomes an integration point for understanding a total business relationship that was bifurcated into a seller in one jurisdiction and a buyer in another. Supplier wallets become a rich source for marketing insights, which track commercial activity through the lens of payments. Real-time data structured by currency, geography or business function easily integrates with other business intelligence.

A supply chain and working capital tool:

Treasurers can introduce virtual business wallets to internal business partners as a strategic tool for financial supply chain and working capital management. For example:

  • E-marketplace sellers can aggregate micropayments in their wallets to better time payment for optimal FX rates while extending days payables outstanding (DPO) for your company.
  • Hotels that accept advanced payment from customers online can use business wallets to pay their hotel owner-operators sooner.

A treasury ecosystem that scales with the business

Virtual accounts can help companies to create an enterprise-wide treasury ecosystem that grows and shifts alongside the business. This network combines virtual accounts for treasury management and business wallets for commercial purposes to better interconnect business strategy and cash flow. It allows for a greater level of integration of the business relationships that drive cash flow, and, in so doing, supports scale efficiency, fast growth and new ways of operating that bring value to your business ecosystem.

Questions to ask potential banking partners for VAM

In considering a banking partner for VAM, it’s important to ask whether a bank’s capabilities will support new business models. Questions to ask include:

  • To what extent can the bank provide a global offering to support international expansion?
  • What innovative capabilities, such as FX optimisation, are available as part of VAM?
  • Does the bank offer a business wallet solution?
  • Does the bank use open systems and APIs to enable customers and suppliers to quickly and easily connect to their business wallets?
  • Is there availability of real-time data presentation to a myriad of end users in the format they need and in the systems they are using?


J.P. Morgan is the marketing name for the Treasury Services business of JPMorgan Chase Bank, N.A. and its affiliates worldwide.

©2019 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC.

The products and services described in this document are offered by JPMorgan Chase Bank, N.A. or its affiliates subject to applicable laws and regulations and service terms. Not all products and services are available in all locations. Eligibility for particular products and services will be determined by JPMorgan Chase Bank, N.A. or its affiliates.

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