What Is an International Bank Account Number (IBAN)?
IBAN stands for International Bank Account Number. The IBAN facilitates the automation of cross-border payment transaction processing. Each country has its particular national IBAN format. The ISO 13616 standard specifies the structure of an ISO-compliant national IBAN format.
ISO has designated SWIFT to act as the registration authority for national IBAN formats. Only a national standards body or a national central bank can request a national IBAN format registration for its country.
An IBAN does not replace a bank's own account numbering, as it’s only meant to provide additional information that helps in identifying overseas payments.
- An international bank account number (IBAN) is a standard international numbering system for individual bank accounts around the world.
- An IBAN is used to identify an individual account involved in an international transaction.
- The IBAN also acts as a method of verifying that transaction details are correct.
- Banks in Europe originally developed the system to simplify transactions involving bank accounts from other countries.
How do you recognize an IBAN number?
It is a series of up to 34 characters, including both letters and numbers.
The International Bank Account Number is not the same as the bank account number.
Actually, it includes the bank account number, plus some more characters that identify the country and bank you’re sending money to.
The IBAN number contains:
- Two-letter country identification code,
- Two check digits,
- Up to 30 alphanumeric characters for the Basic Bank Account Number (known as BBAN). The BBAN format is decided by each country to cater to its national standard for domestic payments. This has a fixed length per country and, included within it, a bank identifier with a fixed position and a fixed length per country.
SWIFT/BIC vs. IBAN:
- The SWIFT system was created before any initial attempts to homogenize international banking transfers through IBAN. Today, SWIFT is the largest international payment system worldwide.
- The most significant difference lies in what they identify. Each IBAN pinpoints an individual account in a given bank in a given country. Each SWIFT/BIC code identifies a bank or a financial institution in an international transaction. Both information actually complements each other when a cross-border payment is made to a country participating in the International Bank Account Number system: proper routing of the transaction will be subject to providing the correct SWIFT/BIC code and IBAN in the payment details.
- Unlike BIC/SWIFT code, IBAN codes aren’t assigned by a central organization. They are directly issued by the banks according to a format described in the IBAN Register.
- SWIFT/BIC codes contain a mix of numbers and letters, and they are always 8 or 11 characters.
- As a result, the SWIFT/BIC code is always required to process a transaction and the International Bank Account Number information is provided to locate the beneficiary bank account in countries participating to the International Bank Account Number system.
When is an IBAN Number required?
IBAN is needed when you make a cross-border payment and the bank of your beneficiary is located in a country participating in the International Bank Account Number system.
When instructing the payment, it must be entered in the field reserved for the beneficiary’s account number, without spaces.
In addition to the IBAN number, you will need at the very least the following information to instruct the payment to your beneficiary:
- The account name
- SWIFT/BIC code
Depending on your bank you may be requested additional information such as the beneficiary’s bank name, the bank address, and the beneficiary’s address.