The IBAN number makes international bank transfers easier and quicker.
The International Bank Account Number is a global system for identifying bank accounts. It’s used to make international money transfers.
IBAN was primarily designed by the ECBS (European Committee for Banking Standards) to facilitate money transfers inside the European Union. Today, 77 countries in South America, the Middle East, Asia, and the Caribbean all implement the IBAN numbering system for international transfers.
The IBAN format: What does IBAN look like?
An IBAN code contains a mix of uppercase letters and numbers. The length ranges from as few as 15 (in Norway) up to as many as 34 alphanumeric characters.
Usually, shorter IBAN codes are used in Europe while longer ones are outside of Europe.
An International Bank Account Number consists of:
National Bank Code (Country code) - two letters that represent the country according to ISO standard
Check digits - two numbers used as the bank identifier with the ISO
BIC bank code - four in total either letters or numbers, depending on the country and the bank
Bank and branch code - expressed in numbers, the length may vary depending on the bank and country
Account number - expressed in numbers, the length may vary depending on the bank and country
Check digits - two numbers that identify an account in the bank
Together, parts 4, 5, and 6 on the list make something that’s called a Basic Bank Account number (BBAN). So, your actual bank account would consist of the bank code, branch code (or sort code), your account number, and the check digits.
You can verify a IBAN by using the European Central Bank’s IBAN checker.
What is the purpose of IBAN?
The IBAN makes international banking easier, overcoming some of the challenges of global payroll and improving the processing time of global wire transfers. Banks use this international standard to identify specific bank accounts when conducting international financial transactions. It makes international payments simpler to conduct because it shows all the necessary information in one line of alphanumeric characters. The IBAN’s built-in check digits also help prevent typos.
What is my IBAN? How do I find my IBAN code?
Your IBAN identifies your account in the international banking system. It separates your specific bank account from all the others in the world with a series of letters and numbers.
Just by looking at your IBAN, another bank can automatically determine which country and bank you have an account in.
There are several ways to find your IBAN code:
Look it up on your bank statement or on online banking
Contact your bank and request the information
Ask your personal banker
DIY: figure out the identifier letters and digits for your country and add your bank account (but be careful, as missing one digit on the routing number can cause your payments to be delayed or go to the wrong person)
You can use an IBAN calculator to combine your account number with your bank’s details
What do I use my IBAN for?
Share your International Bank Account Number to receive international payments from outside of your country.
What is a BIC code?
The BIC (Bank Identifier Code) is essentially the same as the SWIFT code. They are just called differently by different financial institutions.
Can I use my domestic account’s IBAN for payments in other currencies?
It depends on your bank or country. If you receive a payment in a foreign currency, some banks may automatically convert the funds to your domestic currency. Other banks may reject the transfer. It’s recommended to open an account in the specific currency you are receiving. This will allow you to avoid any unfavorable exchange rates and ensure a smooth transfer.
IBAN number vs SWIFT code - what is the difference?
The IBAN is used to identify your particular bank account while the SWIFT code is only used to identify your bank.
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a global network of financial institutions that enables banks around the world to perform international transactions and check account details.
Each bank has a unique SWIFT code. The SWIFT/BIC code consists of uppercase letters and follows naming rules set by the International Organization for Standardization (ISO).
If you use SWIFT, you need to provide additional details separately to find the exact bank account. For example, to send an international transfer to Canada, you need a SWIFT code, a TRANSIT number, and an ACCOUNT number.
What is SEPA and how does it affect my IBAN?
SEPA is a transfer system used between countries of the European Union. SEPA transfers only use Euros. You use your IBAN to make SEPA transfers.
Can I use my IBAN to send or receive payments outside of Europe?
Yes. Although IBAN originated for European countries, the IBAN system can be used to transfer payments outside of Europe.
However, not all cross-border payments use the IBAN system. Some countries use other systems. For example, the United States uses a combination of ABA and the SWIFT system. That means paying foreign independent contractors may require collecting different account details.