International Bank Account Number (IBAN)

It is a global standard for identifying an account maintained in a different country.

Author: Hassan Saab
Hassan Saab
Hassan Saab
Investment Banking | Corporate Finance

Prior to becoming a Founder for Curiocity, Hassan worked for Houlihan Lokey as an Investment Banking Analyst focusing on sellside and buyside M&A, restructurings, financings and strategic advisory engagements across industry groups.

Hassan holds a BS from the University of Pennsylvania in Economics.

Reviewed By: Elliot Meade
Elliot Meade
Elliot Meade
Private Equity | Investment Banking

Elliot currently works as a Private Equity Associate at Greenridge Investment Partners, a middle market fund based in Austin, TX. He was previously an Analyst in Piper Jaffray's Leveraged Finance group, working across all industry verticals on LBOs, acquisition financings, refinancings, and recapitalizations. Prior to Piper Jaffray, he spent 2 years at Citi in the Leveraged Finance Credit Portfolio group focused on origination and ongoing credit monitoring of outstanding loans and was also a member of the Columbia recruiting committee for the Investment Banking Division for incoming summer and full-time analysts.

Elliot has a Bachelor of Arts in Business Management from Columbia University.

Last Updated:October 26, 2023

What Is an International Bank Account Number (IBAN)?

An IBAN (international bank account number) is a global standard for identifying an account maintained in a different country. The number usually begins with a two-digit code, which serves as the country code.

In addition, It is important to note that an IBAN is not intended to replace a bank's account numbering; rather, it is meant to provide additional information that aids in the identification of international payments.

European banks created the system to make transactions involving bank accounts from various countries easier. It is used to identify a specific budget in cross-border transactions.

It can also be used to double-check that transaction data is correct.

In this article, we will explain the international bank account number system, the difference between the International Bank Account Number and account number, the requirements of IBAN, and the relation with SWIFT.

How International Bank Account Numbers (IBANs) Work

An International Bank Account Number begins with a two-letter country code. Following that are two check digits and up to 35 alphanumeric characters. Furthermore, the primary bank account number (BBAN) comprises these alphanumeric characters.

On the other hand, It is up to each country's banking association to decide which BBAN will be used as the standard for that country's bank accounts. As a result, the code's BBAN section varies from country to country, although it commonly includes bank and branch codes.

It will be used when performing interbank transfers or wiring money from one bank to another, especially across international borders. The following are several examples that can be found in the list of nations that now use the International Bank Account Number system:

  • Albania: AL47 2121 1009 0000 0002 3569 8741
  • Cyprus: CY17 0020 0128 0000 0012 0052 7600
  • Kuwait: KW81 CBKU 0000 0000 0000 1234 5601 
  • Luxembourg: LU28 0019 4006 4475 0000
  • Norway: NO93 8601 1117 947

Note that two significant countries, the United States and Canada, do not use this system but recognize and use it to process payments.

It was created to make electronic transfers between banks in the Eurozone easier. Since then, it has spread worldwide, although not all banks and regions have joined the standard, so you may still need to use an alternative system, like SWIFT.

Generally, it is not used for domestic money transfers in North America, Australia, or Asia. It is only used when transferring funds to a country that has adopted the International Bank Account Number system. 

These eliminated any cross-border payment problems and improved verification by lowering rejected payments, transfer delays, and associated bank charges, fees, and taxes.

It contains up to 34 alphanumeric characters:

  • A two-character country code
  • Two check digits
  • A primary bank account number (BBAN) with the specific bank and account details 

Usually, if you are a bank customer in an International Bank Account Number region, you can request it. However, it is essential to note that it can only be used to receive payments; it can not be used to make withdrawals.

What Is an IBAN/Account Number?

Usually, it stands for international bank account number, a designation used to identify individual bank accounts worldwide. Therefore, they must remember the relevant foreign bank account during a cross-border transaction.

On the other hand, an account number is a series of numbers that uniquely identifies a bank account. Each bank account will have its account number if you have more than one. 

  • An account number provides the information needed to receive domestic money transfers.

Usually, the format between the IBAN/account number differs with specific characters and digits. For example, an IBAN is only 34 characters long and consists of alphanumeric characters.


This code can be broken down into the following information:

  • [AA] Country code: Identifies the country where the bank account is held.
  • [BB] Check digits: Allows the sender bank to ensure routing destination security
  • [CCCC] Bank identifier: Identifies the bank of the account holder
  • [DDDDDD] Code for sorting
  • [EEEEEEEE] Account number

It is simple to identify an account number once you have found an IBAN: it is the final 8–12 digits of the IBAN. So, for example, the account number would be [EEEEEEEE].

This is the account number assigned to the consumer when the account was opened, and it will be associated with whatever budget is receiving funds.

In addition, an international bank account number is used to transmit and receive interbank transfers from foreign contacts, as the name implies. Other overseas payment procedures, such as setting up a wire transfer, may also require them.

However, customers must submit the beneficiary's account number when completing a credit transfer or authorizing a direct debit.

Also, customers will be prompted for the recipient's account number when sending money through an online money transfer provider directly to the recipient's bank. In most cases, an account number will be used with a sort code.

IBAN vs. SWIFT Codes

Many know that the International Bank Account Number system and the Society for Worldwide Interbank Financial Telecommunication (SWIFT) code system are internationally recognized and standardized.

These systems make identifying bank accounts when a transfer is made from one country to another much more accessible. The distinction between the two strategies is in the information they provide.

During an overseas transaction, a SWIFT code is used to identify a specific bank, whereas an IBAN code is used to identify an individual account engaged in foreign trade. Both are necessary for the smooth operation of the worldwide financial markets.

The SWIFT system pre-dates IBAN-based initiatives to standardize international banking transactions. Furthermore, most foreign fund transfers are still performed using this approach. 

In addition, the SWIFT messaging system allows banks to share a substantial amount of financial data, which is one of the key reasons behind the design. This information comprises the account's status, debit, credit amounts, and money transfer details. 

Instead of using the SWIFT code, banks frequently have to use the bank identifier code (BIC).

SWIFT and BIC are easily interchangeable, meaning that both contain a combination of letters and numbers and are between eight and eleven characters long.

The Society for Worldwide Interbank Financial Telecommunications (SWIFT)

SWIFT (Society for Worldwide Interbank Financial Telecommunications) is a member-owned cooperative that provides secure messaging for international money transfers between participating banks.

SWIFT began providing communications services in 1977, founded in 1973 by 239 banks from 15 countries. Also, its SWIFTNet messaging system allows banks to share financial transaction information.

It allows financial institutions to transmit information, including payment instructions, securely.

It has developed dramatically over the years, serving over 11,000 institutions in more than 200 countries. In addition, it processed 42 million messages per day in 2021, up 11.4% from 2020.

It replaced Telex as the central system for validating international financial transfers, establishing a standardized coding format for identifying banks and describing transactions.

The main SWIFT headquarters are located in:

  •  Australia, Austria, Brazil, China, France, Germany, Ghana, Hong Kong, India, Indonesia, Italy, Japan, Kenya, South Korea, Malaysia, Mexico, Russia, Singapore, South Africa, Spain, Sweden, Switzerland, the United Arab Emirates, and the United Kingdom.

SWIFT assigns roughly 3,500 institutions shareholding stakes and the power to select directors to its governing board based on their country's use of its messaging system.

Each of the top six countries that use the system nominates two directors to the Board of Directors. Regarding SWIFT usage, each of the following ten nations can appoint one director, while other shareholders can set up three combined.

The board currently includes two directors from the U.S., the U.K., France, Belgium, and Switzerland. Others are from Russia, the Netherlands, Spain, South Africa, Singapore, China, Italy, Sweden, Luxembourg, Canada, Australia, Germany, Japan, and Hong Kong.

Although the directors represent shareholder institutions from specific nations rather than the countries themselves, national governments can also exert influence on financial institutions through regulatory powers and economic sanction regimes.

Understanding SWIFT Transactions

Generally, SWIFT assigns each participating financial company an eight- or eleven-character unique code for money transactions. The bank identifying code (BIC), SWIFT code, SWIFT ID, and ISO 9362 code are all interchangeable terms for the same code.

For example, the eight-character SWIFT code, UNCRITMM, is used by the Italian bank UniCredit Banca, which is headquartered in Milan.

The first four characters represent the institute code (UNCR for UniCredit Banca), the next two are the nation code (IT for Italy), and the last two are the location/city code (MM for Milan).

The remaining three optional characters in the 11-character code represent individual branches if an organization chooses to use them. The UNCRITMMXXX code, for example, is used by the UniCredit Banca branch in Milan.

Assume a TD Bank customer in Boston wants to transfer money to a friend who banks at a UniCredit Banca branch in Venice. The Bostonian can transfer the funds into a TD Bank branch with the friend's account number and UniCredit Banca Venice's unique SWIFT code.

TD Bank will use its secure network to transmit a SWIFT message for a payment transfer to the specific UniCredit Banca branch.

After that, UniCredit Banca will clear and credit the money to the friend's account once it gets the SWIFT message on the incoming payment.

  • SWIFT has grown to provide several services and the SWIFTnet messaging system. Cloud-based connectivity, compliance, and market infrastructure are among them. 
  • SWIFT's services also have become so crucial to global cash flows that they have been blocked as a form of economic sanction.

As a result of the European Union's economic sanctions imposed on Iran for its nuclear weapons program, SWIFT cut off access to Iranian institutions in 2012. However, in 2016, it restored access to Iranian banks that were not subject to other sanctions.

As a result of Russia's invasion of Ukraine, some Russian banks were kicked out of SWIFT in 2022

All banks accept wire transfers, an electronic method of delivering money to another person or entity, although international wire transfers are more expensive and complicated to complete.

There are Intermediary banks which are banks that deal with international transfers in certain parts of the world, such as Australia or EU member countries. There is no differentiation between the correspondent and intermediate banks.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) network handles the majority of international wire transfers. 

Suppose the issuing and receiving banks do not have a working relationship. In that case, the originating bank can use the SWIFT network to find a correspondent or intermediary bank that has agreements with both financial institutions.

Requirements for International Bank Account Numbers

The IBAN was created due to differing national standards for identifying bank accounts.

Misinterpretations and/or omissions of crucial information from payments were expected due to the many uses of alphanumeric forms to represent specific banks, branches, routing codes, and account numbers.

In 1997, the International Organization for Standardization (ISO) produced ISO 13616:1997 to help in this procedure. However, the European Committee for Banking Standards (ECBS) issued a reduced version shortly after, claiming the ISO version's original flexibility was impracticable.

In the ESCB's version, only upper-case letters and a fixed-length IBAN for each country were allowed.

The initial ECBS version was replaced by a new version, ISO 13616:2003, in 2003. However, it does not specify internal procedures, including file organization techniques, storage media, or languages.

A subsequent version in 2007 stipulated that IBAN elements must facilitate data processing internationally. 

Reviewed and edited by James Fazeli-Sinaki | LinkedIn

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