Introduction to International Bank Account Number (IBAN)
IBAN stands for International Bank Account Number and it is a uniquely identifying number used by banks to process international transactions.
It is used to prevent errors made in transcription while also enabling ease in deriving account information for smoother processing or money transfers.
An IBAN is made up of 34 letters that each uniquely identify a customer’s account, account and bank details, especially the country the money is being sent to.
Understanding International Bank Account Number (IBAN)
IBAN is an internationally agreed system under the ISO and registered by SWIFT. It is an internationally agreed upon system for identification of individual bank accounts. The number also laid the groundwork to provide convenience and eliminate the error of transcription while processing these transactions between countries.
Before IBAN came about, multiple numbers and often confusing parameters disrupted the movement of money, leading to delays due bank and branch routing difficulties. It also increased added costs.
Accepted and revised by standards of ISO in 2007, an IBAN has 34 letters, follows a format where the first two letters resemble the country code, the next two become the check digits and the other 30 or so letters signify information about the bank and the account holder, called the Basic Bank Account Number (BBAN).
ISO defines that the number specifies the data required to process the transfer through determining the location and the exchange between nations and industries, but not the internal process, organization techniques and other sensitive details of either the account holder or the bank.
Highlights of International Bank Account Number (IBAN)
The primary purpose of the IBAN is to provide ease and convenience in processing international transactions between industries and individuals alike, and also preventing errors in the process. This is possible due to the standardization formatting of the IBAN.
IBANs are associated with SWIFT (ISO 13616-2:2007). But, it does not assist in easing the process of transactions. SWIFT registers the IBAN and transactions and payment orders.
Almost 77 countries in the world across Europe, the Carribean and the Middle East have begun to use the IBAN system, as of May 2020.
