We’ve launched local AED VIBANs for our international customers. This blog explains what a VIBAN is, how it works and why this is an exciting update for MENA…
Cross border payments can be challenging - often expensive, inefficient and involve lengthy time delays. VIBANs allow businesses to quickly reconcile payments, increase acceptance rates by having the payment move in the name of the customer, and reduces the number of lost or unidentified transactions.
More about VIBANs in MENA
While IBANs are commonplace in places such as Europe or the UK, they’re not fully adopted across the globe. For example, North America, Australia, New Zealand and China don’t offer IBANs but use SWIFT codes and routing numbers¹.
Since 2011, the Central Bank of the UAE (CBUAE) mandated local banks² to accept and process payments using an IBAN. This is relatively late given IBANs were adopted by the European Committee for Banking Standards in the late 90s. Within the region, IBAN infrastructure is widely integrated today. Countries such as Kuwait, Lebanon, Saudi Arabia, Tunisia and Turkey have implemented the IBAN format account identifiers³. However, local virtual IBAN solutions are not prevalent.
Currently, MENA is showing an uptick in demand for payment innovation. For example, the UAE’s digital payment market is forecasted to grow to $9 billion by 2028 - we recently discussed this projection here.
Two major reasons for this gap in the market:
Local banks have not been required to adopt these new technologies as local payment companies simply need a settlement account to receive payments.
Global interest in the region is a relatively new development. The global demand in this case preceded the local supply.
And, that’s where Fuse comes in.
We started Fuse with the mission to provide access to MENA for global companies. The major VIBAN use case is for international customers who cannot open physical bank accounts in the region. Our team has built VIBAN infrastructure to enable customers to receive and send payments using local rails. Our largest customers are international payment companies, platforms and enterprises looking to collect and pay out in the region. Our VIBANs provide a solution for high frequency use cases and multi-currency treasury management.
We’re optimistic about the region, and what our VIBAN solution enables for international companies (without the need for local operations and licensing). The world is focusing on the opportunities of the region, so we’re excited to build the infrastructure to support its growth.