IBAN complete guide: what, when and how?
In order to successfully transfer money to other countries, it is not enough, just a desire. It is essential to know all the necessary details for this, the IBAN number.
That is why, before sending money to another country, you should get answers to several questions at once:
- How to know your IBAN?
- How long is an IBAN number valid?
- How to send money with an IBAN number?
- How to make a payment to an IBAN?
In this case, it is desirable for you to find out all the points related to international transfers at once so that each further transfer to other countries becomes even more straightforward and understandable for you.
This article will be a kind of instruction for you to understand how to find an IBAN number, pay to an IBAN account, and use IBAN to transfer money.
What is IBAN?
We will not go into complicated technical details at once. We will just say that IBAN is a unique code, which every account opened in one bank or another has. Thanks to this code, banks will quickly understand which country and which bank the transfer is sent and quickly process these payments without any difficulties and problems.
You may ask: “But was it worse without the existence of IBAN?”
Yes, this is true because all the banks in different countries had their specific standards for account identification.
Since there was no clear and understandable format of identification, there was often confusion with international payments. If IBAN provides for the existence of check digits, then earlier without their existence, any mistakes could remain unnoticed by bank employees. As a result, payments could be sent to the wrong accounts, which led to many complicated proceedings. In other cases, payments had to be suspended until the details were clarified, which did not arouse any positive emotions from companies or banks. Without IBAN, both the sending bank and the receiving bank incurred additional costs.
To overcome all the problems associated with routing, the International Organization for Standardization created and published a special standard, ISO 13616:1997. The European Committee on Banking Standards adopted it almost immediately, but later it had to be slightly revised. And yet, since 2014, the IBAN system was officially adopted throughout the European Union.
From that moment on, a standard appeared in Europe, which all banking institutions needed. Thanks to a common and fixed format, banks quickly identified and verified the account, avoiding common errors that led to delays in payments.
In addition, the IBAN system achieved other important goals:
- Quickly find all bank accounts to which funds were transferred from abroad
- To see all the necessary components of a bank account for an error-free and fast transfer of funds
- Minimize the number of errors that used to occur frequently in international bank transfers
- Significantly reduce the costs associated with transferring money overseas, especially in SEPA countries
It may seem unbelievable, but thanks to the introduction of the IBAN system alone, the probability of errors in international transfers have been reduced to as low as 0.1%.
Before we answer the question about how to find out your IBAN, let’s compare this system with SWIFT.
It is worth noting right away that many people still confuse IBAN and SWIFT codes, believing that they are identical. Although they serve the same purpose: to reduce the number of errors on banks when sending international payments to a minimum and help banks identify accounts, they provide slightly different information.
It is worth mentioning that IBAN codes are needed to identify a specific bank account, while with a SWIFT code, you can identify the bank involved in the transaction.
The SWIFT system is a global identifier of banks. It cannot be said that once IBAN is implemented, SWIFT will cease to exist. It will never happen because SWIFT is still an important method of processing payments carried out in other countries. Today, the SWIFT system has more than 40,000 members, and this number can only increase in the future.
If you compare the length of the two codes, almost immediately you can see that the SWIFT code is significantly shorter than the IBAN. Four characters in the code stand for the bank’s code, two more are country codes, two characters are needed to determine the location quickly, the remaining two or three characters stand for the branch code.
If these symbols are present in the SWIFT code, it is clear as XXX that this is the main branch.
As for the structure of the IBAN code, its length will depend directly on the country. In some countries, its length is only 14 characters, while in others, it can be up to 30. The highest is the 35-character code, with each character being important.
- The first letter is the country code;
- Then two more digits stand for the check or transaction number;
- The next letters are the bank code, followed by the 6-digit bank sorting code;
- And, of course, a unique bank account number.
It is important to realize that the IBAN code is not a full substitute for the account. It is, first of all, created for banks to identify the recipient of funds faster and easier.
How to know your IBAN?
You can understand that to transfer funds abroad successfully, you need to provide the correct IBAN. Any mistakes can lead to a severe delay in the payment, or the money will not be sent to the correct address at all. In addition, your bank may additionally bill you for an invalid payment.
Checking your IBAN is a must. It is always true whether you send or receive money.
Here are a few quick and easy ways to find your IBAN:
- Call the bank. One of the fastest ways to find out your IBAN is to call your bank and tell them your account number and first and last name.
- Look carefully at your bank statement. It is not uncommon for banks to publish an IBAN code on bank statements. Pay attention to the lower or upper right corner of the statement. If you have a paper statement, there are almost always blank spaces in the statement’s bottom or top right corner.
- Bank application. Many banking applications show an IBAN code when the client logs into their account.
- Use the online IBAN calculator. You just need to enter your account number and bank code so that the system will convert this information into an IBAN code.
We hope that now such questions as “how to get IBAN”, “how to make IBAN number” and “how to send money to IBAN number” will not cause you problems.