What’s an IBAN number and how does it work in the UK?
The meaning of the IBAN code in global banking transfers.
When it comes to international banking, you want a fast yet secure way to send and receive cross-border payments. IBANs play a critical role in ensuring this. An IBAN is not to be confused with a SWIFT code — a bank identifier code. An IBAN code is used in bank account identification.
Depending on your country, you may not have heard of IBANs. For instance, banks in the United States, Canada, Australia, New Zealand and China don’t use IBANs. Instead, they use SWIFT codes or routing numbers. So, always check on the available payment methods before you make a global payment.
To get you started, here are 17 key business terms that every international merchant should know.
In this article, we’ll explain what IBAN means for you, and explain the characters — including country and bank code and your account number. Learn how you can make payment transfers through your banking account easier with IBAN.
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IBANs play an important role in ensuring your funds are transferred to and from you fast and securely. Knowing how IBANs work helps you prevent errors in your cross-border transactions.
What is an International Bank Account Number (IBAN)?
IBAN stands for International Bank Account Number (IBAN) — it’s used in many countries when making any kind of international payment between individual bank accounts. It’s a fast and secure method of money transfer. Your unique IBAN number ensures that money is transferred to the right account.
IBAN consists of 34 letters and numbers in a standardised format. Here’s an example of how your IBAN number would look like.
Before the introduction of IBANs, there were different bank account number formats for different European countries. Errors were inevitable in cross-border transactions. Global payments ended up in the wrong locations and bank accounts.
In 1997, the International Organisation for Standardisation (ISO) implemented a new international standard for international transfers — ISO 13 616-2:2007. Now, it’s easier for merchants to send money internationally.
How to find an IBAN in the UK?
There are 4 simple ways you can find your IBAN if you are in the UK.
- Check your bank’s online banking app for account details
- Check the top of your bank statements
- Check your debit card
- Contact your bank to request for it
If you’re still unable to find your IBAN, there are online tools that will help you, like this online IBAN calculator. All you need is your country name, bank code, branch code, national check digit, and account details (like an account number) to calculate your 34-digit IBAN.
You may also use this online IBAN checker to ensure it’s error-free.
How long do IBAN transfers take?
IBAN transfers usually take around one to five working days, similar to telegraphic transfers. International bank transfers can only be processed on business days, depending on your bank.
If you make your transfer request before the bank’s cut-off time, your request should be processed on the same day. If your request is made after the bank’s cut-off time, it will be on the following business day.
One point to note is that you may see the funds withdrawn from your account almost immediately once the bank has processed your transfer. However, this does not mean that your recipient gets the funds there and then. It will take one to five business days till the funds show up in the recipient’s bank account.
IBAN vs. SWIFT Codes
These are two terms in international payments that are commonly used wrongly. When you’re making a payment, you may be asked for an IBAN or a Society for Worldwide Interbank Financial Telecommunication (SWIFT) code.
Both International Bank Account Numbers and SWIFT codes facilitate international money transfers and are both internationally recognised for identifying bank accounts during a cross-border transaction — thus it’s easy to mix them up. The difference lies mainly in what information the terms convey to banks.
IBAN: Used to identify an individual bank account in the international transaction
SWIFT codes: Used to identify a specific bank associated with that bank account during the international transaction
How does an IBAN number work?
When you submit an international transfer together with the IBAN, your bank:
- Runs the IBAN characters under their payments system
- Verifies the numbers and letters against their database
- Confirms the sender’s and recipient’s account
- Checks both account information
- Process the payment if the information is valid
When are International Bank Account Numbers required?
An IBAN is only required during international, global, and cross-border payments. For domestic money transfers — within the UK, for example — you don’t need an IBAN.
Transferring payments within the UK? Consider using BACS payments instead.
Which countries use IBANs?
All European Union countries and a majority of other European countries use IBANs for international money transfers. Worldwide, more than 70 countries use International Bank Account Numbers. You can download the full IBAN registry list here.
It’s important to note that although countries such as the United States, Canada, Australia, New Zealand and China don’t use the IBAN system, they still recognise and process payments according to the system.
For example, if you’re sending money to Canada, you may not be required to include an IBAN number. However, if someone from Australia is sending money to you (in the UK), they’re required to include your IBAN number.
IBANs may come with high forex exchange rates. Avoid high fees when making international payments.
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Frequently asked questions about IBANs
Who Uses an IBAN?
An International Bank Account Number (IBAN) is used when making international transfers and transactions. IBANs are most commonly found in European countries.
How to get an IBAN number?
You can find your International Bank Account Number (IBAN) easily through 4 ways: your bank’s online banking app, the top of your bank statements, your debit card, or contact your bank directly. You can also find your IBAN number by using an online IBAN calculator and checker.
Is IBAN the same as a basic bank account number?
No. Your IBAN is different from your account and sort number. An IBAN is solely here to help overseas banks identify your bank account and ensure that your international payments go through and are received by you.