International Bank Account Number (IBAN) & Uses ..

 

What Is an International Bank Account Number (IBAN)? 

An IBAN, or international bank account number, is a standard international numbering system developed to identify an overseas bank account. The number starts with a two-digit country code, then two numbers, followed by several more alphanumeric characters. Note that an IBAN does not replace a bank's own account numbering, as it’s only meant to provide additional information that helps in identifying overseas payments. 

Key Takeaways

•An international bank account number (IBAN) is a standard international numbering system for individual bank accounts around the world.

•Banks in Europe originally developed the system to simplify transactions involving bank accounts from other countries.

•An IBAN is used to identify an individual account involved in an international transaction.

•The IBAN also acts as a method of verifying that transaction details are correct.

 

 How International Bank Account Numbers Work 

 The IBAN number consists of a two-letter country code, followed by two check digits, and up to thirty-five alphanumeric characters. These alphanumeric characters are known as the basic bank account number (BBAN). It is up to the banking association of each country to determine which BBAN they will select as the standard for that country's bank accounts. However, only European banks use IBAN, although the practice is becoming popular in other countries.

 An IBAN number will be used when sending interbank transfers or wiring money from one bank to another, especially across international borders. In the register of countries currently using the IBAN system, several examples are as follows:

•Albania: AL47 2121 1009 0000 0002 3569 8741

•Cyprus: CY 17 002 00128 0000001200527600

•Kuwait: KW81CBKU0000000000001234560101

•Luxembourg: LU 28 001 9400644750000

•Norway: NO 93 8601 1117947

 Important:The U.S. and Canada are two major countries that do not use the IBAN system; however, they recognize the system and process payments according to the system.

Requirements for International Bank Account Numbers 

 The IBAN developed out of diverging national standards for bank account identification. Varying uses of alphanumeric forms to represent specific banks, branches, routing codes, and account numbers often led to misinterpretations and/or omissions of critical information from payments.

To smooth this process the International Organization for Standardization (ISO) published ISO 13616:1997 in 1997. Shortly after the European Committee for Banking Standards (ECBS) published a smaller version, believing the original flexibility allowed in the ISO version was unworkable. In the ECBS’s version, they allowed only upper-case letters and a fixed-length IBAN for each country.

 Since 1997, a new version, the ISO 13616:2003, replaced the initial ECBS version. A subsequent version in 2007 stipulated that IBAN elements must facilitate the processing of data internationally, in both financial environments and among other industries; however, it does not specify any internal procedures, including but not limited to file organization techniques, storage media, or languages.

  

 Who uses IBAN?

IBAN was first created to facilitate electronic payments between banks across the Eurozone. Since then, it has expanded worldwide, although not all banks and not all regions have joined the standard and you may still need to rely on an alternative system such as SWIFT instead. North American, Australian, and Asian countries do not use the IBAN for domestic money transfers, and will only do so when sending a payment to a country that has adopted the IBAN.

 

Why was IBAN created?

IBAN was developed to reduce errors and improve verification of cross-border payments  by reducing rejected payments, transfer delays, and associated bank charges and fees.

What does an IBAN number look like?

An IBAN number contains up to 34 alphanumeric characters. It is prefaced by a two-character country code, two check digits, and a Basic Bank Account Number (BBAN) that contains specific bank and account details. The format of the BBAN portion various from country to country, which will typically include a bank code and branch code.

 

How can I get an IBAN?

You can request an IBAN if you are a customer of a bank in an IBAN region. Note that an IBAN can only be used to receive payments, and is not used when making withdrawals.

Collection by M.Ajmal Khan