If you want to send money internationally from your bank, you have likely been asked to provide certain numbers. Two of the most common ones are Swift and IBAN numbers. These numbers help your local bank to initiate payments to the actual person or company you are sending to. This article explains what is an IBAN number, how it differs with SWIFT, and how to validate the number.
What is an IBAN Number?
IBAN stands for the International Bank Account Number (IBAN). This is a number that is used to identify bank accounts across different countries. Its goal is to simplify the process, reduce errors, and ensure that money reaches the intended person or company.
The idea of creating the IBAN was initiated by the European Committee of Banking Standards (ECBS) with the goal of easing money transfer across the European Union. It was then adopted by other countries especially those in the Middle East and Caribbean.
The IBAN number is made up of 34 alphanumeric characters that include the country code, two check digits, and a number that has the domestic account number, branch, and the routing information. The check digit is important in the verification of the check by the local bank.
Examples of IBAN numbers for Belgium and United Kingdom are BE71 0961 2345 6769 and GB98 MIDL 0700 9312 3456 78 respectively. Banks confirm the IBAN number by converting it into an integer and performing a mod-97 operation. If the number is valid, the remainder is equal to 1.
Banks in the United States and Canada do not use the IBAN number.
IBAN vs SWIFT Number
There is often a confusion on the difference between IBAN number and SWIFT code. The main difference is that while IBAN's goal is to identify a particular account, SWIFT is used to recognize banks.
The name SWIFT stands for Society for Worldwide Interbank Financial Telecommunication and is headquartered in Switzerland. The number has four main parts, which are a four-letter bank code, a two-letter country code, a two-digit location code, and a two-digit branch code. For example, the SWIFT number for JP Morgan Chase Bank is CHASUS33.
In reality, a SWIFT number works as follows. If a Citi Bank customer in the US wants to send money to a friend who stays in Italy, she will need to have the SWIFT number of the friend's bank. Citi will then send the payment transfer SWIFT message to the friend's bank using the SWIFT's secure network. After receiving the message, the bank will clear the funds to the friend. Most banks around the world have a SWIFT number.
Using the IBAN Number Checker
When sending funds to a person or a company, it is important to validate whether the number is accurate. To do this, there are many free web and mobile platforms that allow you to check and validate the number. For example, using the IBAN website, the following result was generated.
International trade and globalization have led to the need for faster and accurate international money transfer systems. Because of technology and international cooperation, it now takes a few hours to have money sent from one country to another. This has simplified the money transfer system that used to take days and weeks.
IBAN and SWIFT numbers are very important when making international transactions. They have made the process faster and safer. They are a proof of what the world can achieve through cooperation and standards.