Last updated on August 23, 2018
Do you send money to friends and family overseas? Or maybe you work with foreign clients and often receive payments from abroad?
If so, you’ve probably heard the terms IBAN and BIC. Yet, if you are not familiar with their meaning, read on to learn more.
What does IBAN stand for?
IBAN stands for International Bank Account Number, which is an internationally accepted system used by banks and financial institutions to process and identify bank accounts. Thanks to this system, banks can process transactions and reduce the risk of transcription errors.
The format of an IBAN number
IBANs consist of 34 alphanumeric characters. These characters are most often a combination of digits (from 0 to 9) and Latin alphabetical uppercase letters. Each set of characters has a specific meaning:
- The first two characters of the IBAN are always letters. These letters are the code of the country the account holder’s bank is located in.
- The next two characters are called check digits. Their job is to perform sanity checks on the sender’s bank inquiry. In other words, they check the integrity of the transaction before it gets submitted to the receiving bank. They find duplicated or mistyped characters and digitally correct anything wrong.
- The rest of the 30 characters represent your bank account number, often referred to as Basic Bank Account Number (BBAN). However, the BBAN is not always 30 characters. Its format is country-specific and is determined by the country’s national central bank.
The bank must decide on a fixed length and include case-sensitive alphanumeric characters. The BBAN should contain the domestic bank account number, branch identifier and potential routing information. Each country has different BBAN number.
Which countries have an IBAN?
IBAN is mostly used in European countries, but many countries outside of Europe also use it. In some countries, the use of an IBAN is mandatory, while in others it’s recommended.
You can find the list of countries where the use of IBAN is mandatory and recommended here .
What does BIC mean?
BIC refers to Bank Identification Code, also known as SWIFT code, which is a code that both financial and non-financial institutions use. Financial institutions use it in bank transactions and wire transfers. The main use of the BIC code is to identify financial and non-financial institutions in the day-to-day transactions.
What does SWIFT stand for in banking?
SWIFT means Society for Worldwide Interbank Financial Telecommunication. This is a system which banks and financial institutions worldwide use to send and receive information about transactions which are made securely in a standardized way.
Is SWIFT code same for everyone?
No, each bank has its own SWIFT code.
Is a SWIFT code the same thing as a BIC code?
BIC, SWIFT-BIC, BIC, SWIFT ID or SWIFT code – they all mean the same thing and are an international standard format used on payments. They are used to identify banks in transactions and make sure the order reaches the destination.
If you want to make worldwide transfers anytime, anywhere, join LeoPay and open a free account with a dedicated IBAN.