What is a nostro account? Nostro and vostro accounts explained
By SendPay Business · · 2 min read
A nostro account is an account a bank holds with another bank abroad, in that country's currency. "Nostro" means "ours": from the UK bank's side, it's our money held over there. From the foreign bank's side, the same account is a vostro account: "yours", held with us.
Why banks need them
To pay someone in euros, a UK bank needs euros somewhere in the euro system. Rather than moving money across borders for every payment, it keeps a balance in a nostro account and pays out from there.
A simple example
- A UK bank keeps a euro account with a bank in Germany: its nostro.
- A customer sends €500 to someone in Germany.
- The UK bank takes pounds from the customer and tells the German bank to pay €500 from its nostro.
- It tops the nostro up from time to time as it runs down.
Why it matters for money transfer apps
Holding money in advance in the countries you pay into, known as prefunding, lets transfers be paid out locally and quickly. The trade-off is that money sits idle in each currency and is exposed to exchange rate moves.
Where SendPay fits
SendPay platforms include GBP, EUR and USD accounts and currency exchange under your own brand, powered by licensed partners.
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Build my platform →Questions people ask
What is correspondent banking?
How banks move money through partner banks abroad.
What is correspondent banking? →What is a multi-currency account?
An account that holds several currencies.
What is a multi-currency account? →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.