Glossary

Virtual Account / E-Money Account Overview | Glossary Modulr

Written by Modulr | Jul 24, 2025 11:00:00 PM
A virtual account can refer either to a safeguarded digital electronic money (e-money) account that sits above a fiat bank account – ‘virtually’ – or one that exists independently. In this broad context, virtual accounts can refer to dedicated and specific e-money accounts created to receive or send specific funds, and general purpose accounts that exist for reasons beyond facilitating transactions, such as savings and investments. Virtual e-money accounts can be issued and managed via API, allowing instant creation and configuration, compared to traditional bank accounts that often require manual onboarding, physical paperwork, and longer approval times. E-money accounts can be deeply integrated into business platforms via real-time APIs, enabling automated payments, reconciliation, and embedded finance. These can be cheaper to open, maintain, and scale compared to physical accounts, especially when issued programmatically, and can embed automated AML, KYC, and transaction limits, offering control at the product level. The granularity and scale of these accounts can be especially useful in platforms or marketplaces managing money on behalf of users, as virtual accounts allow separation of funds without needing to onboard each client with a bank. Virtual e-money accounts are not a deposit product: they don’t earn interest, and providers cannot lend against them. While virtual e-money accounts are not FSCS protected (in the UK), unlike bank deposits, they are safeguarded via regulatory mechanisms that protect 100% of deposits, making them arguably more robust, particularly for large amounts.