IBAN Numbers: What Are They and How Do They Work?
International money transfers and other payments take longer than domestic financial transactions. When processing payment documents in traditional and crypto bank systems, you should specify many details. That’s because in case of mistakes, money may be lost or sent to the wrong address, and it will be problematic to return it. To avoid such complications and speed up international settlements, a special format of bank accounts, known as IBAN, was developed.
IBAN (International Bank Account Number) is a customer’s bank account number. It’s often requested in bank details, and banks rarely specify what it is and where to request it. It’s a number that is used as the identifier of the recipient, using the banking companies of the European Union and the Eurozone. Today, it’s the only identifier that can be used.
How to Read and Format an IBAN?
IBAN numbers are governed by the international standard ISO 13616, according to which each state may determine the structure of an international bank account number. The code comprises a combination of Arabic numerals and Latin letters and may include no more than 34 characters which are usually written in groups separated by spaces. However, in payment documents and electronic payments, such a code must be specified without any spaces.
There is a unified IBAN format which contains:
- 1-2. The code of the state where the banking institution is located.
- 3-4. A unique control code which is calculated according to the requirements of ISO 7064.
- 5-34. A basic bank account number which comprises the account number itself and contains the attributes of the banking institution or its branch.
It’s up to each country to determine a basic bank account number. The length of the combination must not exceed 30 characters. For example, IBAN for Ukrainian citizens contains 29 symbols.
How Do IBANs Work in International Money Transfers?
Here’s what to do if you want to transfer money to a recipient in a country which operates in the international codification system:
- Find out the recipient’s international code.
- Correctly fill in the fields on the payment order. It contains the standard data:
- the bank-sender;
- the bank-recipient;
- recipient of the payment or beneficiary;
- purpose of the payment.
You must enter the IBAN details carefully. If you make a mistake, the money will be sent to a wrong address. Finding it back will take time, and banks charge additional fees for such services.
What Are the Advantages and Disadvantages of Using IBANs?
IBANs are used when receiving money. They allow you to identify the company or other recipient and successfully send the money exactly where you need it. Although the international system SWIFT is used everywhere, it’s highly advisable to know the full details of European banks to avoid problems when sending or receiving money.
Since banks use this number to recognize the recipient, identify the bank, and determine whether it belongs to a particular country, the transfer by full details is an open book. Financial institutions successfully find out all the necessary information about the sender and the recipient. For this reason, in the absence of the necessary data for identification, a client can simply refuse the transfer.
However, personal IBAN brings significant advantages:
- Promptness of the transfer by bank details. Money can be credited to an account within one day of its sending.
- Safety of transfers and their history. In case of unforeseen problems, clients can easily protect their rights.
- By providing more details, you reduce the risk of fraud.
Moreover, knowing full requisites reduces the risk of fraud because clients need to know the maximum amount of information about their recipients. This makes impossible a lot of fraud schemes, which are often practiced in transfer services without this level of protection.
Clients should choose how they want to transfer money independently. If they are still choosing a full-fledged transfer with full details, they should know how to check IBAN or SWIFT codes.
How to Find Your IBAN Number?
An international account number is available for any account of a natural or legal person opened with a financial or credit institution that operates under EU rules. These days, the IBAN code is used in over 60 countries, including Austria, Azerbaijan, Belgium, Estonia, Finland, Germany, Israel, England, Georgia, Kazakhstan, Lithuania, Latvia, Norway, Poland, Turkey, and the UAE.
In order not to lose time and money, and to ensure that the funds sent accurately reach the addressee, contact the recipient in advance and ask to clarify the IBAN. It’s possible to find IBAN by:
- going to a bank branch with your passport;
- using an ATM and print out a receipt with the ID on it;
- going to the details section in the Internet bank.
Each account has its own IBAN. Therefore, for trading and investing, you need a unique code of the financial company where the funds are to be received.