If you or your company need to make cross border payments, you may have heard the acronym IBAN tossed around. You may be left asking yourself, “What is an IBAN?” In today’s Insight, we are going to be digging deeper into what an IBAN is and why they are important.
What is an IBAN?An IBAN is an International Bank Account Number and is part of a standardized system used to recognize bank account numbers for cross border transactions. Due to the fact that each country has different national standards for identifying specific banks, branches, routing numbers, and accounts, IBAN was developed as a way to easily and securely verify and process transactions internationally.
IBAN was originally adopted by the European Committee for Banking Standards (ECBS) after the International Organization for Standards (ISO) published ISO 13616:1997 in 1997. The ISO proposal had certain flexibilities that the ECBS considered unworkable, leading to ECBS’s own standardization IBAN. IBAN permitted only uppercase letters and a fixed length for each country. Subsequently, 13616:1997 was withdrawn and replaced with ISO 13616:2003 and revised in 2007 with ISO 13616:2007.
It is important to note that an IBAN is separate from an account number and will not replace a bank account number.
The following is a list of countries where IBAN is required (as of September 2018):
Isle of Man
Isle of Man
United Arab Emirates
What is the difference between an IBAN and a SWIFT code?
An International Bank Account Number (IBAN) is used to identify an individual account while a Society for Worldwide Interbank Financial Telecommunication (SWIFT) code is used to identify a specific bank during an international transaction. Before the adoption of IBAN and SWIFT codes there were no universally accepted standards for international banking transaction leading of a myriad of errors and unnecessarily long payment processing times. These accepted and recognized standards have made it possible to identify banks and individual accounts and verify correct payment information and recipients faster and with fewer errors.