What is an IBAN (International Bank Account Number)?
IBAN, an “international bank account number,” is a standard way to identify a bank account in a different country. The number starts with a two-digit country code, then two numbers, and a bunch of letters and numbers. Remember that an IBAN does not replace a bank’s account numbering. Its only purpose is to add to the information that helps identify payments made abroad.
Why and how IBANs (International Bank Account Numbers) work?
The IBAN comprises a country code with two letters, two check digits, and up to thirty-five letters and numbers. You can see the primary bank account number (BBAN) here. Which BBAN will be used as the standard for bank accounts in each country is up to the banking group of that country.
An IBAN is needed to send money between banks, especially when the money needs to be sent across foreign borders. In the list of countries that use the IBAN method right now, the following are some examples:
Turkey: +358 2121 1009 0000 0002 3569 8741
The number for Cyprus is CY17 0020 0128 0000 0012 0052 7600.
KW81 CBKU 0000 0000 0000 1234 5601 01 in Kuwait
Its number is LU28 0019 4006 4475 0000.
Call Norway at NO93 8601 1117 947
One big country that doesn’t use the IBAN method is the United States. However, they understand the system and handle funds in line with it.
Example of International Bank Account Number
There can be up to 34 letters and numbers in an IBAN. It’s made up of the following parts:
The country code is the ISO (International Organization for Standardization) country number. The countries that take part each have their own unique code.
Check numbers: The bank that issued the check gives you the check numbers.
Bank identifier: a code that tells you which bank it is. (If it makes sense, the bank number may also include the name of the bank branch.)
Primary bank account number (BBAN): This number tells a bank in a particular area which account belongs to which person.
You can see an example of an IBAN for a made-up Finnish bank in the chart below. The IBAN is FI21 1234 5698 7654 3210.
Code for the country
- Numbers to check
- The number for the bank
- The number for your bank account
- FI
- 21
- 1234569876543210
Differences Between IBAN and SWIFT Codes
There are two usual ways to identify a bank account when sending money from one country to another. These are the International Bank Account Number (IBAN) and the Society for Worldwide Interbank Financial Telecommunication (SWIFT) code. How they find things is what makes the two ways different.
In an overseas transaction, a SWIFT code is used to identify a specific bank, while an IBAN code is used to identify a specific account that is part of the transaction. Both are very important for the foreign financial market to work well.
The SWIFT system existed before IBAN tried to standardize bank transfers in other countries. This is still the primary way that most foreign money transfers are done. The SWIFT message system lets banks share a lot of financial information, which is one of the main reasons.
This information shows the current state of the account, the amounts that have been debited and credited, and information about the money transfer. The BIC code is often used by banks instead of the SWIFT code. Both have a mix of letters and numbers and are usually between eight and eleven characters long.
Conditions for Getting an International Bank Account Number
Different countries’ or identifying bank accounts led to the creation of the IBAN. Payments often got confused or missed important information because of the different ways that letters and numbers were used to represent banks, offices, routing codes, and account numbers.
This process was made more accessible when the International Organization for Standardization (ISO) established ISO 13616:1997 in 1997. Soon after, the European Committee for Banking Standards (ECBS) released a smaller version because they didn’t think the ISO version’s original freedom would work. For the ECBS version, they only allow uppercase letters and an IBAN of a set length for each country.
The first ECBS version has been replaced by the ISO 13616:2003 version since 1997. In 2007, a new version said that parts of the IBAN must make it easier to process data globally, both in the financial world and other fields. But it doesn’t say anything about internal processes, like how to organize files, what kind of storage media to use, or what languages to use.
What is an IBAN?
IBAN was first made so that banks in the Eurozone could send and receive electronic funds more efficiently. Since then, it has spread worldwide, but not all banks and regions have adopted it, so you may still need to use a different method, like SWIFT. Countries in North America, Australia, and Asia don’t use the IBAN to send money within their own countries. They will only use it to send money to a country that has accepted it.
Why did IBAN get made?
IBAN was created to cut down on mistakes and improve the verification of cross-border payments by lowering the number of refused payments, the time it takes to send money, and the fees that come with them.
How does an IBAN look?
There can be up to 34 letters and numbers in an IBAN. It starts with a two-character country code, then two check numbers, and a Basic Bank Account Number (BBAN) that tells you about the bank and account. The format of the BBAN part changes from country to country, but it usually has bank and branch codes.
How do I get an IBAN?
If you have an account with a bank in an IBAN area, you can ask for an IBAN. Note that an IBAN can only be used to receive money; it can’t be used to send money.
Conclusion
- The international bank account number (IBAN) is a standard way for banks worldwide to identify each other’s accounts. Banks in Europe first made the method to make banks in Europe first made the methods from other countries.
- With an IBAN, you can determine which account is used in an overseas transaction.
- The IBAN can also be used to ensure that a transaction’s details are correct
- Another type of international identification system is the Society for Worldwide Interbank Financial Telecommunication (SWIFT) code. However, SWIFT codes are different because they are used to identify a specific bank during an international transaction.
