Genome Blog/articles/ Main differences between a bank account and a business account of financial service providers
Aug. 19, 2022
Main differences between a bank account and a business account of financial service providers
Both personal and business bank accounts play a huge role in our lives, from daily matters to workflows. But what is exactly a boundary between these two accounts in the perspective of financial services? In this article, Genome will talk about banks, financial service providers, online banking, personal and business accounts, their common services, and their differences.
What is a regular bank?
A bank is a financial institution that provides banking services, including deposits, credit, and payments. This financial institution carries out credit and financial transactions. The term bank can generally refer to the banking sector. Banks play an essential role in the stability and functioning of the financial system and are generally subject to significant prudential supervision by the state.
Banking functions
A bank is an institution that has the following functions:
Offers banking services such as loans, receipt of deposits from the public, and payments;
Performs trades and distribution, either directly or through relations with banking intermediaries;
Performs trades in other related services, such as investment services, insurance, or any other service;
Online banking
Online banking offers access to banking services from an interactive interface, such as a web browser or an application, over the internet connection. Online banking can be accessed by smartphone, personal computer, tablet, from an automatic teller machine (ATM), by computer, or using a personal assistant (PDA) with internet access.
Its availability allows clients to access online bank accounts, carry out transactions, or obtain recent financial information. The connection is ensured by secure protocols and measures.
A financial service provider is any institution that manages money on behalf of a client. For instance, financial service providers include banks, credit companies, finance businesses, eMoney issuers, insurance businesses, and many other payment institutions. Thus, the concept of a financial service provider is logically wider than a bank itself, along with online banking.
What is a personal bank account?
A personal bank account is a financial space for an individual that facilitates all money-related actions. An account is kept by a bank on the basis of a bank account agreement concluded with its holder or holders, as a bank account may also be kept by several individuals.
The bank account holder may freely dispose of the funds accumulated on an account, as long as the agreement with the bank does not contain provisions restricting the freedom to use these funds.
A personal account is something we all know from our daily life experiences. We use it to pay and to be paid. We use it to send money and withdraw cash. And also, we have options to save money, make deposits, and obtain credits.
Digital wallets
Naturally, a personal bank account aims to support the daily financial life of a customer as much as possible. For that, banking institutions offer basic services, along with advanced ones. The same deal is with online banking. They issue digital wallets for clients and propose various useful services.
Receive money from individuals and organizations or companies;
Send money;
Make singular and recurrent card payments;
Withdraw cash;
Make savings;
Security
Normally, digital wallets can be accessed via a provider’s website or application. Regarding security, digital wallets are very well protected. There are basically three main directions: fraud protection when accessing an account, fraud protection when using financial services, and international compliances.
When accessing an account via smartphone, tablet, or desktop, a fraud protection system is responsible for identity verification. There is a strong mechanism which is called Two-factor authentication or simply 2FA. It requests that a user presents a minimum of two identification methods. They can be the following:
something a user knows like a password or code;
something a user has like a phone;
and something a user has, such as a fingerprint or a face recognition;
When using any of the financial services, there is fraud protection as well. It exists to protect a user from card theft, fraud, or account hacking. This mechanism is usually AI-powered and has around 12 different categories to verify if it really is the account holder that currently uses the account or card.
For example, a bank client lives in Romania and normally shops in supermarkets, online for some gardening, and withdraws cash once a month. If suddenly a fraud prevention system detects that the next day this cardholder buys online video games from another European country, for example, Italy, we have an alert. The system will send a double verification, a notification to a user, and can even block the card.
Finally, international compliances and regulations exist for all financial institutions, including banks. Following them is obligatory. Surely, there are some institutions that do not comply, but when discovered, the company can be fined, closed, and even have a criminal threat. And besides that, from the client’s perspective, it is way better to trust the money to some reliable institutions.
A business bank account is the very same bank account but with more advanced features that help companies and business individuals to manage their funds better. So it does have all the same functions as the personal account in its basis.
Sure thing, the range of functionalities would depend on what a particular business needs. So we can definitely see that a freelancer’s requests would be different from a big corporation’s ones.
Normally, the main goal of an online business account is to give separate space for business funds and not to mix them with private funds. Another thing is about taxes. If all the business transactions happen in one space, it is more simple to follow them and sum them up in the end.
Also, business account holders can share an account and assign roles for other team members, for example, to an accountant department; also, business accounts allow better supervision over departments’ finance flow.
Here are some benefits of an online business account
Keep the business and personal funds separately;
Deal easier with taxes;
Share roles and assign responsibilities between departments;
Supervise each department’s financial flow;
Access advanced account analytics;
There is one more big difference between personal and business accounts. Having a personal account allows an individual to grow to a business account, which is pretty much the same deal, especially for freelancers and bank business accounts for small businesses.
A business account allows a business to start a merchant account. And this is another cup of tea. A merchant account does not allow its holder to send money, make payments, savings, credits, and most of the transfers. It has only one role: a merchant account allows a business to accept card payments in retail and online.
And when the money is incoming to an account, only one action can be done: it can be transferred to a business account of the very same company. That is it. But to have a merchant account, a business should have a business account, and so a personal one.
Personal bank account vs. business bank account
The main difference between a personal bank account and a business bank account is in the purpose. A personal account serves individuals and their financial needs, while a business account sustains businesses of any size, including freelancers.
That is why personal accounts would slightly differ from each other by the main need, such as checking or savings account, and also by the ownership as an account can belong to one adult, family, or child.
Business accounts have more contrast within. Imagine just the range of service a regular freelancer would need, compare it to a small business needs and to the grand corporation.
For instance, if there is a graphic designer, they might need to be paid and properly declare taxes. A small corner bakery would need on top of that some analytics and maybe a shared option to include an accountant. While a huge movie streaming service would approach the business account in a much more advanced way, starting with analytics and shared roles, finishing with the symbiosis with its merchant account.
Personal bank account vs. business bank account:
Personal account
Business account
Having a physical and/or virtual card
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Sending and receiving transfers
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Making payments
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Receiving salaries
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Sending salaries
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Making savings
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Sharing account
with family members
with colleagues
The next level of the account
business account
merchant account
Who can have an account?
an individual, a family, or a child under the parents’ supervision
a freelancer, a small business, a medium business, a big business
A possibility to open it in the physical brunch
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A possibility to open it online
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Benefits of Genome: open personal and business accounts
Genome is an account provider that issues personal, business, and merchant accounts*. It permits a user to benefit from a full financial ecosystem. Genome also allows users to create accounts in three currencies such as EUR, GBP, and USD, performing a currency exchange between them. Please visit the website to open a business or personal account.
*Please note that Genome’s merchant services have been temporarily unavailable since September 2024.
What’s the difference between a regular bank account and a business account?
A regular bank account is called a personal bank account, and it serves the individual financial needs of a client. A business bank account belongs to a business of any size like a freelancer, small business, medium business, or big business, and it serves each particular need of a company. Both personal and business accounts do have the same set of essential financial services.
What is a bank? How does a bank differ from most other financial service providers?
A financial service provider is any company that manages a client’s money on their behalf. A banking institution is a part of financial service providers. Its field of services includes banking services, including deposit, credit, and payment.
What is the difference between banking and finance?
Banking is a part of finance. Other finance companies could be, for example, payment service providers, e-money issuers, or insurance companies. A bank is a financial institution carries out credit and financial transactions.
