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Payments with virtual accounts
magine you run a lending platform with thousands of borrowers.
You want a repayment method that:
Works for everyone (no card required)
Is easy to understand (just bank transfer)
Automatically updates loan records
Instead of relying only on cards or direct debit, you assign each borrower a unique account number they can transfer money to anytime.
This is how payments with virtual accounts work.
What is a virtual account?
A virtual account is a unique bank account number assigned to a specific borrower or transaction. It looks and behaves like a real bank account — borrowers can transfer money to it from any bank, and the funds are credited instantly. The difference is that it sits within the Lendsqr payment infrastructure and is tied directly to a borrower’s wallet.
When a borrower transfers money to their virtual account, the funds credit to their in-app wallet in real time. The system then automatically applies the credit toward any outstanding loan repayment, following the configured priority order: penalties first, then fees, then interest, then principal.
In Lendsqr, every borrower and lender is assigned a virtual account that is used for:
Loan disbursement
Loan repayment
Wallet funding
Why virtual accounts matter for lenders
For lenders, virtual accounts simplify repayment collection significantly:
Reduced payment failures — Unlike card-based payments that can fail due to expired cards or insufficient funds at the exact repayment date, bank transfers to a virtual account can be made any time the borrower has funds available.
No manual reconciliation — Every payment is automatically matched to the correct borrower by their unique account number. You never have to manually identify who paid what.
Instant crediting — Funds reflect in the borrower’s wallet immediately after the bank transfer completes, with no processing delay on the Lendsqr side.
Bank-agnostic — Borrowers can transfer from any bank — mobile app, internet banking, USSD, or over the counter — as long as the destination account number is correct.
Why use virtual accounts for payments?
Virtual accounts solve several key challenges in lending:
No dependency on cards → works for all users
Easy repayment → borrowers just transfer money
Automatic tracking → payments are detected instantly
Reduced reconciliation issues → each user has a unique account
Compared to other methods, virtual accounts provide a simple and reliable repayment option, especially in markets where bank transfers are widely used.
How payments with virtual accounts work
Here’s the full flow:
1. Account creation
A virtual account is automatically assigned when a user signs up
2. Loan disbursement
Loan funds are sent to the borrower’s virtual account
Borrower can transfer to their personal bank account
3. Loan repayment
Borrower sends money to the same virtual account
Payment is instantly detected
4. Wallet update
Funds are credited to the borrower’s wallet
Loan repayment is automatically applied
Real-world examples
Example 1: Simple repayment flow
A borrower needs to repay ₦25,000.
They open their banking app
Transfer ₦25,000 to their virtual account
The system instantly updates their loan balance
No cards. No manual confirmation.
Example 2: High-volume lending operation
A lender managing 10,000 borrowers assigns each one a unique virtual account.
Each repayment is tied to a specific user
No need to manually match payments
Reports are automatically generated
Example 3: Disbursement and repayment loop
Loan is disbursed into a borrower’s virtual account
Borrower withdraws to personal bank
Later repays to the same account
This creates a closed-loop payment system that is easy to track.
How borrowers use their virtual account to repay
The borrower logs into their lending web app and navigates to the homepage.
Their unique virtual account number is displayed prominently in the dashboard.
They open their banking app (or any bank channel) and initiate a transfer to the virtual account number.
Funds credit to their Lendsqr wallet instantly after the transfer clears.
The system automatically applies the wallet balance to the outstanding loan according to the repayment priority order.
How lenders use virtual accounts to fund their disbursement wallet
Virtual accounts are not just for borrowers. As a lender, you also have a virtual account number tied to your disbursement account. You fund your disbursement wallet by transferring money from your business bank account to this number — and the balance updates in real time, making those funds immediately available for loan disbursements.
Settlements and timing
While borrower payments reflect instantly in wallets:
Funds are settled to lenders on a T+1 basis
This means:
Payments today → settled next business day
Frequently asked questions
Is a borrower’s virtual account number permanent?
Virtual account numbers are typically assigned once and remain linked to the borrower for the duration of their relationship with your platform. Borrowers can reuse the same account number for multiple repayments across different loans.
What happens if a borrower overpays?
If the amount transferred exceeds what is owed on the loan, the remaining balance stays in the borrower’s wallet. They can use it toward future repayments or transfer it out, depending on your platform’s withdrawal configuration.
Are virtual accounts available for all lenders on Lendsqr?
Virtual account availability depends on your Lendsqr subscription plan and the payment providers integrated with your platform. Contact your account manager or Lendsqr support to confirm whether virtual accounts are enabled for your organization.
