Real accounts are assigned a dedicated IBAN/account number by the service provider. Unlike virtual accounts, service providers track the balance of real accounts just like any other traditional account.

Service Providers

Clearbank, Currencycloud, Modulr and Railsr can issue real accounts for clients.

Account Model Diagram

Client Account 1-n: Independent accounts with their own balances, managed by the service provider.
Transactions: All incoming/outgoing transfers and exchange transactions are processed directly on the selected client account.
Internal Transfers: Since client funds are kept separate across multiple client accounts, any internal transfers between client accounts on the IF side must be reflected in the service provider’s system.
Fund Collections such as fee and card transaction collections, are processed from each client account to a dedicated Operational Account for the specific purpose.
Scalability: As the number of clients increases, managing daily financial operations and reconciliation becomes more complex. Therefore, this model is considered less scalable compared to using virtual accounts for clients.
For more details on how different transaction types are processed in this model, refer to Real Client Accounts - Not Virtualized - Flow of Funds.

Virtualization

The IF Platform addresses the scalability challenges of issuing real accounts for clients. We simplify your daily operations by making the real account model function similarly to the virtual client account model. This solution, called Virtualization, allows you to enjoy the operational ease of virtual client accounts, even if the service provider doesn’t offer them. To implement this, a Client Money Account is used alongside the real client accounts.

Account Model Diagram

Accounts: This model is similar to the Virtual Client Accounts model, with the key difference being that Client Accounts 1-n are independent accounts with their own balance on the service provider’s side.
Incoming Transfers: When an incoming transfer is made to a client account, it only credits that client account. After the transfer is approved and completed on the IF side, the platform performs an internal transfer from the client account to the Client Money Account on the service provider’s side to consolidate the funds. This process is called a "virtualization sweep" and ensures that the account model behaves like the Virtual Client Accounts model. As a result, client accounts have no balance when there is no active sweep in progress.
Outgoing Transfers: Outgoing transfer instructions must be created on the client account on the service provider’s side so that the sender’s name appears as the client on the beneficiary's bank. Since client accounts have no balance in idle state, IF must fund these accounts before the external transfer can be processed. This funding transfer from the Client Money Account to the selected client account is known as "virtualization funding". Only after the "virtualization funding" transfer is complete can the external transfer be released to the service provider.
Internal Transfers: Since client funds are aggregated in the Client Money Account, internal transfers between different client accounts are not sent to the service provider. They only update the IF ledgers of client accounts.
Exchanges: Client exchange transactions are processed directly on the Client Money Account.
Fund Collections such as fee collections and card transaction collections, are processed from the Client Money Account to a dedicated operational account for the specific purpose.
Scalability: This model reduces complexity in managing funds for thousands of clients because the daily financial operations are less affected by the number of client accounts.
For more details on how different transaction types are processed in this model, refer to Real Client Accounts - Virtualized - Flow of Funds.