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Do you want to switch to a virtual account?
More and more people are making the move to an online account – but what is it, and what does it allow you to do?
For many people, an online money management account is a convenient way to manage money in a more modern way, without waiting in line in a branch to complete everyday tasks that should be much easier.
You still get the essential features – although it’s worth checking before you sign up for a virtual account, as different providers offer more basic or fully featured accounts.
Not all virtual accounts are actually operated by banks but in some cases that can give you more peace of mind about the way your funds are held and used by your account provider.
What is a virtual account?
When most people talk about a virtual account now they mean an online account where most of your money management takes place via a website dashboard or a mobile app.
In the past there were also telephone banking accounts, but these were often operated by the high street banks, so you still had to go into a branch for some of your account admin.
Telephone banking is still commonplace, but increasingly many account holders are managing their money online first, and just making a telephone call if something goes wrong or they need to speak to a human being.
In either case, a true virtual account should not require you to visit a physical branch of a bank – for example Arro Money accounts have an entirely online application process with no need to meet an advisor.
Benefits of virtual accounts
It’s important to note that not all virtual accounts are equal, so you should make sure to open your account with a provider who is fully regulated to provide electronic money services, like Arro Money are.
But in general, virtual accounts from legitimate providers offer some good benefits:
- Faster and easier application processes.
- Transparent and competitive transaction fees.
- No pestering to take a credit card, mortgage or loan.
- Purpose-built online dashboards for account admin.
- Access to common everyday payment methods.
Arro Money’s account admin dashboard was purpose-built for the job and unlike many online providers, it is not licensed from a third party.
That means we can continue to develop it and security test it in the future, while some other providers might be unable to develop their platform, or might have to replace it completely when their licence deal expires.
We didn’t want our account holders to have to deal with that kind of disruption, so we built our own thoroughly tested proprietary technology, and continue to deliver seamless updates and new features.
Virtual accounts vs. traditional bank accounts
A virtual account such as the Arro Personal Account still gives you many of the features you would expect from a traditional bank account, so you can use it in familiar ways, and other people can pay you using normal methods.
You don’t have to install an app to send and receive payments – you just use proper finance industry systems like Faster Payments, Direct Debit (not currently available, but it’s coming soon!), MasterCard® debit card and ATM withdrawals.
And you have a sort code and unique account number, just like a bank account, which people can use to transfer money to you from their online banking dashboard. You can even have your wages or salary paid directly into an Arro Personal Account without it being any different from paying into a bank account.
Again, we wanted our virtual accounts to resemble traditional bank accounts in all the positive ways, without the negatives such as high transaction fees and long waits in branch.
Are virtual accounts bank accounts?
While some banks might offer online-only accounts, not all virtual accounts are bank accounts, and we think that’s a good thing.
Arro Personal Accounts are an electronic money service, but we are still fully regulated by the FCA and aim to exceed the minimum expectations that regulation carries anyway.
We think it’s important to note that our customers’ deposits are never invested in risky stocks and shares, but are held in a separate account, so the only person with any claim to them is you when you request a withdrawal.
That means whatever happens, your money will never be used to cover our own costs – you will always be able to withdraw it when you want to in the future, without having to queue in a branch or file a claim with the Financial Services Compensation Scheme as you would if your high street bank were to go bust.