ConnectPay has launched Virtual Accounts (vIBANs) that allow licensed financial institutions to issue dedicated IBANs to business customers.
Through the new service, Lithuania-based Embedded Finance provider ConnectPay enables electronic money institutions (EMIs), payment institutions, neobanks, and specialised banks to assign a separate virtual IBAN to each of their business customers. Every vIBAN is linked to a single master account that the institution holds with ConnectPay, where all funds remain. Institutions issue and manage the vIBANs through one API.
Verification of Payee and the pooled account model
The launch addresses a structural issue for institutions that collect funds on behalf of business customers into one shared account and allocate them afterwards. Since 9 October 2025, banks and payment service providers in the eurozone have been required to confirm that the payee’s name matches the account before a euro transfer is executed.
Under a pooled model, the receiving account belongs to the provider rather than to the business being paid, which produces a name mismatch. Payers are then shown a warning, and some abandon the transaction before authorising it, meaning no payment is created. The European Banking Authority had previously raised the issue in its 2024 report on virtual IBANs, pointing to the fragmented application of Verification of Payee in cases where the vIBAN user is not the holder of the master account.
According to Marius Galdikas, Founder and CEO of ConnectPay, institutions do not need an additional pooled account but rather an IBAN in each customer’s own name and a clear record of payments. The official noted that developing this capability internally requires scheme access, new infrastructure, and a team to operate it, which ConnectPay has already built, thus its partners do not have to.
How the service works
An institution opens one master account and issues individual vIBANs to its business customers. For payers and recipients, each vIBAN operates like any other beneficiary account. Incoming funds are attributed to the relevant customer even when the payer omits the payment reference, while outgoing transfers carry the name of the customer to whom the vIBAN was issued, not the institution’s name.
The vIBANs support SEPA, SEPA Instant, and transfers within ConnectPay. Institutions oversee the accounts and initiate payments via ConnectPay’s API, and each transaction is listed on the master account statement together with the corresponding vIBAN and customer name, allowing reconciliation in the institution’s own systems.
Under this model, the customer relationship stays with the institution. End-customers do not register with ConnectPay; the institution handles onboarding and checks, and decides which customers receive a vIBAN. On its side, ConnectPay provides the underlying account infrastructure and manages the partnership.
