Like many of you, we believe open banking is the future. But until now, organizations in the U.S. haven’t been able to connect with banks and fintechs simply and directly, which has potentially limited some companies’ ability to innovate.

To solve this problem, Dwolla has developed our Virtual Account Number (VAN) feature for account-to-account transfers. This service will open up the options for sending, receiving and reconciling funds among parties in the U.S. financial system. Today, VANs are available to select pilot clients, as we work toward a full release in early 2022.

How Dwolla’s Virtual Account Numbers Work

Virtual accounts are virtual subledgers within one physical depository account, and they have many potential functions in finance. For instance, “virtual account management” is a treasury service that uses virtual accounts to help manage working capital by providing rapid insights into a company’s cash position. By contrast, Dwolla is exploring the potential of virtual accounts in a way that’s fresh to the U.S. market.

We’ve created our Virtual Account Numbers (VANs) offering to help power innovation with sophisticated account-to-account payments solutions. VANs serve as versatile tools for creating, simplifying or organizing payment process workflows because they are easy to generate and dissolve. By using VANs to customize payment processes for your specific needs, you can take better advantage of the possibilities for innovation that open banking promises to create.

VANs act as virtual routing and account numbers (subledgers) for your Dwolla Balance. They perform two crucial functions:

  1. Eliminate the need to deposit funds into an intermediary depository account before transferring funds in or out of your Dwolla Balance.
  2. Keep transaction data separate and organized within the Dwolla Balance.

Current State of Funds Transfers

To understand the potential of VANs to improve funds transfer and tracking, we need to consider the way account-to-account transfers work today.

It’s Better to Originate Than Receive

In business-to-business transactions, the common wisdom is to choose to originate rather than receive an ACH transaction. Both parties in an ACH transaction want to avoid having to reveal their account numbers for an authorized account-to-account transfer. An organization on the receiving end of an ACH transaction must provide their account number and authorize a transaction, whereas the organization on the originating end does not need to provide their account information to initiate the transaction.


To get around this problem, some companies create additional accounts or subaccounts just for the purposes of making or receiving payments. These separate accounts may provide a sense of security, but they slow down the transfer of funds. Creating additional accounts can also be a manual and sometimes expensive process.

Tracking Data

Regardless of whether an organization uses one or multiple accounts, reconciling and tracking transactions can be involved and time-consuming. Because it’s impractical to create separate accounts for each party sending and receiving funds, organizations use reference numbers to track funds or reconcile transactions manually. In the case of a popular application, users may run into the hundreds of thousands and reconciling payments from multiple users can be challenging.

Improving Processes Using VANs

Creating an application for business-to-business payments can be difficult because the funds flow process is complicated. Transferring funds from one business to another requires creating multiple subaccounts and intermediary accounts. VANs can open up the possibilities for business-to-business applications because they streamline the funding workflow.

VANs reduce the time, effort and cost involved in sophisticated business-to-business payments. By generating VANs, your clients can easily disburse funds from a Dwolla Balance to another business without using subaccounts, intermediary institutions or even asking for the recipient’s account number. Your client can assign each end user a VAN, which the end user provides to the recipient organization. The VAN allows the recipient organization to act as the ACH originator to pull an ACH debit from the Dwolla Balance. This can work tremendously well for bill payment providers, payment facilitators, real estate platforms and investment products—any application that facilitates sophisticated business-to-business funds transfer.

Connect Easily to Multiple Payment Providers

If your payment processes rely on a multi-provider structure, you know it can be challenging to receive and disburse funds. Each payment processor deposits funds into your bank account. Then, you transfer those funds into your app wallet via wire transfer or ACH. The process is time-consuming, expensive and far from simple.

With VANs, your payment processor can send funds directly to your Dwolla Balance, regardless of whether the processor is originating the transaction from a bank account or mobile wallet. In addition, VANs make tracking and reconciling transactions far easier because you can generate a VAN for each processor, keeping transaction data discrete.

Fund From Multiple Sources

Budgeting applications can help users save money, build credit and automate their financial life. But an application, such as one for budgeting, may require making transfers from multiple bank accounts. To set aside money for a large purchase, the app provider goes through several steps. An app user’s employer deposits funds directly into the user’s bank account. The user then authorizes the savings app provider to originate an ACH debit from the user’s account for the designated amount to be saved.

With VANs, the process is far simpler. The app provider can assign the user’s Dwolla Balance a VAN, which the user provides to the employer or payroll provider. The employer can deposit the amount designated for savings directly into their employee’s Dwolla Balance. Similarly, the savings app provider could use VANs to transfer funds from a mobile wallet or a checking account.

Simplify Reconciliation

In each of these use cases, VANs make it easy to track funds. You can generate as many VANs as needed and assign them to any category: client, end user, project, location and more. If you want to automate reconciliation, you can also build out a reporting feature by using VANs.

For any application or organization that deals with numerous parties and participants, the tracking functionality can save substantial time and resources.


To know when to act, you need certainty. Whenever a deposit shows up in your balance through a VAN, a webhook will notify you instantly that the funds are available. Because you know the status of the transfer, you can automate next steps — no more logging into a bank account to see if yesterday’s transfers have been deposited yet.

Solutions for Innovators

VANs are one more way that Dwolla helps power sophisticated account-to-account payment solutions for innovators. VANs give you a way to embed Dwolla into any workflow that can accept a routing and account number pair.

How else can you use it? Well, we’d like to hear from you.

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