Simplifying reconciliation and bookkeeping, the automated sweep is an OpenPayd feature built to make life easier.
We’re not a big fan of giving things fancy names for the sake of it. You see, we could have followed that time-tested tech approach and given this product feature of ours a one-word name with some of the vowels removed - ‘Sweepr’, perhaps.
We could have called it TOPAS (short for The OpenPayd Automated Sweep), that’s got a more robust, engineering feel to it. But instead, we decided to do something bold and simply call it what it is. An automated sweep. A way to sweep funds automatically from your customers’ virtual IBANs into one central master account.
What are virtual IBANs and why are funds there in the first place? Let’s start with that, and give a little more information as to exactly what this feature looks like.
Much like IBANs, virtual IBANs (or ‘vIBANs’) are a way for payments to be received easily. However, unlike IBANs, they are not paired 1:1 with a bank account, enabling many vIBANs to be linked to one central account.
This agile nature makes it easy for them to be created and assigned to all users of a service. For example, let’s imagine a customer wants to put money on to a fiat wallet with a cryptocurrency trading platform. Instead of the customer adding funds directly to the platform’s central account, with those funds then having to be reconciled correctly, all customers can top-up directly to their vIBAN individually.
For the customer, this flow is exactly the same. But when it comes to payment reconciliation, the impact on the business is massive. With no reliance on reference numbers, hours are saved for finance and operations teams reconciling payments, and the possibility of human error if paying by bank transfer is eliminated.
So life is already made significantly easier for businesses. However, this is only step one; it’s the opening act. Up next is the star of the show: the automated sweep.
With funds being held on virtual IBANs, all of the reconciliation work has been automated for the business, with no impact on customer experience. However, this does mean that funds on a business’s platform are now spread out across perhaps tens of thousands of sub-accounts.
The business still, of course, has a view of all funds, but they are not held in one centralised account. This can make things more challenging in terms of financial management and forecasting.
That’s why we built a solution: The automated sweep. Funds now enter the business’s platform via vIBANs, keeping all the benefits of instant reconciliation. Then, the funds are automatically ‘swept’ from these vIBANs to a central master account.
Because the funds have first passed through the vIBANs, balances on individual user accounts are still reflected accurately. The funds themselves, however, are now in the business’s main pooled account.
This is advantageous for all things treasury-related. Budgeting, expenses, strategy, payroll - clarity on the funds a business has on its platform impacts all of these things. With the automated sweep, that clarity is possible, without the business having to take any further action themselves.
Let's use a hypothetical example. A user creates an account on a digital investment platform - a company like eToro or Robinhood. They want to purchase Apple stock and to do so, they need to add money to their account. They make a bank transfer, and use their virtual IBAN as the account information to make the transfer. The funds ‘appear’ in the cash balance on their trading account instantly, as it passes through their designated vIBAN.
Then, the automated sweep kicks in. When the funds hit the customer’s vIBAN, they are then automatically swept up to the trading platform’s main account.
This is the case for all funds the user adds to their account - whether card payments or bank transfers, they can all be routed through the virtual IBAN infrastructure. No matter how many accounts are created and the speed at which our trading platform grows, vIBANs can be issued and assigned instantly to their users. Simple as that.
While this example refers to an investment platform, there are many companies that could use vIBANs and the automated sweep to minimise operational overhead while training a conclusive view of their cash flow.
We didn’t spend long on the name - we were too excited to tell people about what it did.
Welcome to the first day of the rest of your (embedded finance) life.
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