IBAN account service, do you already have one? By the way, are you aware on what IBAN, SWIFT and BIC means? If this is your first time reading about IBAN, SWIFT and BIC this is the perfect article for you. You’ll learn the meaning of IBAN, SWIFT and BIC codes and other essential information that comes with them.
This article is highly recommended to people like you who are having international money transfer for your business.
What is an IBAN?
An IBAN literally stands for International Bank Account Number. The numbers are normally attached at all accounts in the EU countries which includes Hungary, Switzerland, and Norway. Unlike a normal bank account, IBAN is made out of codes that identifies the country the account belongs to, the account number itself and the bank of the account holder. With IBAN, processing instant IBAN transfer is a lot easier and faster.
Constructing an IBAN
How can you identify an IBAN? Unlike your usual bank account, an instant IBAN is made out of 34 alphanumeric characters which are constructed like this:
- The two letters find in IBAN is representing the home country of the account holding bank.
- Two numbers that stands as the control key.
- The other 30 alphanumeric characters is the identification of the bank and the ordinary account number.
The alphanumeric characters in the IBAN are also known as BBAN or Basic Bank Account Number. It is actually up to the banking association of their country to determine which BBAN they’ll be selecting as the standard in the countries bank account. But, you should first know that only the European banks use IBAN, although the practice is becoming very popular on other countries as well. The US and Canada are two of the major countries that are not using the IBAN system; however they still recognize the system and the process payments.
In general, an IBAN is being used in sending instant IBAN transfer or what they say as wiring money from one bank to another especially when it’s across the international borders. From the registry of countries that are using the IBAN system these are some samples:
- Kuwait: KW81CBKU0000000000001234560101
- Norway: NO8330001234567
- Cyprus: CY21002001950000357001234567
Major International Requirements for IBAN
According to the history of IBAN, instant IBAN was developed out of diverging national standards of bank account identification. The various uses of alphanumeric forms represent the specific banks, routing codes, branches and account numbers has often led to numerous misinterpretations.
In order to smooth out this process, the ISO or stands for International Organization for Standardization had published the ISO 13616:1997 last 1997. After the release, the ECBS or European Committee for Banking Standards published a smaller version as they believe that the original flexibility of ISO was unusable. With the ECBS version, it only allowed the upper case letters and fixed length IBAN for each country.
From 1997 a new version surfaces the ISO 13616:2003, it replaced the ECBS version. In 2007 a subsequent version arises and it stipulated that the IBAN elements must facilitate the processing of data in internationally. That’s covering both the financial environments and other industries.
How can you get an IBAN?
If you are interested in getting an instant IBAN to your advantage, you should know that the bank assigns an IBAN to your accounts. You cannot really automatically calculate an IBAN by yourself, because each bank has their method when it comes to registering their holders account number in the IBAN. You’re IBAN will appear on your account statements and in the banks online systems.
Aside from IBAN, SWIFT and BIC are also recognized as standardized methods of identifying bank accounts when a money transaction for one country to another is taking place, let us know them both.
What are SWIFT and BIC code?
The SWIFT or short for a Society of Worldwide Interbank Financial Telecommunication code or BIC which is a standard format of Business Identifier Code. These two particular codes are very unique code as they are used for identifying financial and non-financial institutions. These codes are generally used when transferring money between banks, especially for international wire transfer or telegraphic transfer. Not only is that, these codes also used in exchanging messages between banks. For individual use, the SWIFT code is normally used in transmitting money across the international border.
The SWIFT codes are consists of 8 or even 11 characters. Whenever an 8 digit code is given, it normally refers to the primary office and the code is formatted like below:
- The first 4 characters are the bank codes are only letters
- The next 2 characters are the ISO 3166-1 alpha -2 country code that are only letters
- The next 2 characters are location codes which are composed of letters and digits. The passive participant will have “1” in the second character.
- The last 3 characters are the branch codes, these are optional.
The registration of SWIFT codes is being handled by the Society for Worldwide Interbank Financial Telecommunication and their headquarters is located at La Hulpe, Belgium.
Are SWIFT and BIC codes the same?
The answer is YES, the confusion with these two lies in the fact that the SWIFT system can handle BIC or bank identifier codes, which is the same as the SWIFT code.
SWIFT Fund Transfer System
The SWIFT system attempts to standardize the international banking transactions through IBAN and it stills remains the main method when it comes to international fund transfers. One of the main reasons for this is that, the SWIFT messaging system allows banks to share significant amount of financial data. The said data includes the current status of the account, the debit and credit amounts and some details related to the money transfer. They are instances that the bank prefers to use the BIC instead of the SWIFT code. Well, the two are easily interchangeable as both codes contain both a mix of letters and numbers that are generally between 8-11 characters.
If you are capable of accessing both identifiers you can ensure for a quick and successful international transfer. But remember, the identifier required by the bank actually depends on the bank that’s being used, the recipient’s bank and the countries in which the transfer is being originated and was received.
Is my SWIFT code the same as my routing number?
That is a NO, for local or domestic payments, the US banks uses a domestic routing code in order to identify your bank and bank account. It’s made out of 9 digit ABA numbers that identifies your bank, branch and your unique account number.
If you are confused, your routing number is commonly found at the bottom of your personal checks or if you are going to sign in your online banking system.
Benefits of using IBAN and SWIFT
Both international bank codes instant IBAN and SWIFT/BIC provide superior security and have the ability to accelerate transfer of funds. The codes has been standardized globally and you are able to verified payments orders in order to see if the bank account information’s are correct before they are transferred. This is a good indication that there will be less error, less complaints and less inquiry charges.
Difference between IBAN and SWIFT
The majority of banks and other financial institutions are using different kinds of identification numbers for multiple reasons. Your bank account number for sample is very unique and helps in identifying you as the account holder. Same with transfer of funds between financial institutions, it also requires the use of identification numbers in order to facilitate a flawless flow of money. While the other banks from other countries rely on numerous codes, SWIFT and instant IBAN are commonly used for these sorts of transactions.
Before instant IBAN and SWIFT were introduced there is no unified identification method that allowed banks in a certain country to identify banks and individual accounts that comes from other countries. Without these codes, ensuring that the proper and correct information was entered in international transactions was very challenging and very time consuming, besides from the delayed, incorrect and missed payments that results to added costs and inconvenience.
The key difference between the Society for Worldwide Interbank Financial Telecommunication code and International Bank Account Number is that while SWIFT is used in identifying a particular branch of bank in the financial institution, instant IBAN is being used to identify individual accounts and both codes are routinely used in carrying out international money transfers.
You might find IBAN and SWIFT a bit confusing for this is you first time learning about them but let’s just sum it up. The instant IBAN and SWIFT are able to identify specific banks amongst the numerous financial transactions that are being conducted worldwide amongst bank accounts. They are both very essential when it comes to international money transfers.
If you want to learn more about IBAN account service and instant IBAN transfer you can always check out NeoBanQ.com. They can provide you with all the information about your IBAN. What are you waiting for? If you want a seamless experience with international money transfer as your business advantage IBAN and SWIFT are the perfect codes for your needs.