What is IBAN and what is it used for? If you have ever tried to make an international transfer, you have probably encountered the term IBAN. It may sound mysterious, but after reading this article, you will understand everything you need to know about the International Bank Account Number and its applications.
What is the full meaning of IBAN?
What is IBAN? This acronym stands for International Bank Account Number. In short, it is a standard that enables seamless transfers between countries. It was introduced to facilitate the identification of accounts in different banks worldwide and reduce the number of errors in transactions. Thus, it is a number that identifies a bank account, but it does not replace the account number you are familiar with from everyday domestic payments.
The structure of the number varies depending on the country. It consists of several components: a two-letter country code (e.g., PL for Poland), two check digits, and an account number that can be up to 35 characters long. For example, the Polish IBAN number is: PL10 1050 0099 7603 1234 5678 9123. The letters “PL” indicate the country, the next two digits are the check sum, and the rest is the bank number and account number.
It is worth mentioning that the IBAN structure was developed by the International Organization for Standardization (ISO) and the European Committee for Banking Standards (ECBS). Thanks to this system, the standard bank account number has gained an international equivalent, which facilitates settlements between countries, especially in Europe.
How to create an IBAN?
You might be wondering how to get your account’s IBAN number. Fortunately, it is very simple. In most countries, this number is generated based on the national account number, with the country code added in front of it. Examples of country codes include:
- Poland – PL
- Germany – DE
- France – FR
- United Kingdom – GB
- Czech Republic – CZ
In Poland, it is enough to add the letters “PL” at the beginning of your 26-digit account number to create a full IBAN number. It is worth remembering that in Poland it always consists of 28 characters, while in other countries the number of characters may vary.
Why is this important? This number allows you to identify your account in the international account database. It is a key element in foreign transactions that ensures the funds are correctly directed to the appropriate bank.
How does the IBAN work in international transfers?
When you send money abroad, providing the IBAN number becomes a necessity. An international transfer without it will not be processed correctly, which may result in payment delays or even its rejection. That is why it is so important to provide the full IBAN number so that the recipient’s bank can easily identify it.
When do you need this number? For example, when ordering goods from abroad and the seller asks for payment directly to their account. It also helps minimize errors – thanks to the check sum, the first two digits after the country code verify the accuracy of the entire number.
International transactions in Europe and beyond have become easier thanks to the implementation of the IBAN standard. Although not all countries worldwide use this system, it is widely recognized and processed. Banks in the United States and Canada do not use IBAN but acknowledge this standard for international payments.
What is BIC (SWIFT) and how does it differ from IBAN?
The IBAN number is often paired with the BIC code, also known as SWIFT. BIC (Bank Identifier Code) is a unique code that identifies the bank. It is used in international transactions to specify which bank processes a given operation.
How does BIC work? The BIC code usually consists of 8 or 11 characters. It includes the bank identifier and – if it is longer – the identification of a specific branch. Examples of BIC codes for Polish banks include:
- PKO Bank Polski – BPKOPLPW
- ING Bank Śląski – INGBPLPW
- Santander Bank – WBKPPLPP
During an international transfer, the IBAN identifies the account, and the BIC identifies which bank the money should go to. Together, these two codes ensure that the transaction reaches the right place – it’s like addressing a letter with the full address and recipient’s name.
What are the benefits of using an IBAN?
Why is it so important in today’s financial world? There are several main benefits of using this standard:
- Security – minimizes the risk of errors when entering the account number, thanks to the built-in check sum.
- Transparency – The standard format makes it easy to read where the account is located and which country it belongs to.
- Universality – it is accepted worldwide, allowing for seamless transfers between countries.
The International Bank Account Number is becoming a tool that makes financial borders between countries disappear, allowing you to transfer money quickly and conveniently.
How to verify the correctness of an IBAN yourself?
You can also verify the correctness of the number yourself before sending a transfer. How can you do this? Simply move the first four characters to the end of the number and replace the letters with their numerical values. Then divide the resulting number by 97 – if the remainder is 1, the number is correct. This system ensures that your money will reach its intended destination.
Thanks to this check sum, automated banking systems can easily catch errors made when entering the account number, protecting both the sender and the recipient of the payment.
How to find your account’s IBAN number?
You can find your bank account number in several ways. The easiest way is to log into online banking – in the account details, you will find its international number. You can also check it on the paper agreement with the bank, as well as in your bank’s mobile app.
If you know your standard account number in Poland, adding the country code “PL” at the beginning is enough to create a full IBAN number. Each bank also provides information about the number upon request, so it is worth contacting the bank if you do not have access to it.
Frequently Asked Questions about IBAN and BIC
You can find this number in online banking, the mobile app, on a bank statement, or in the agreement you signed with the bank.
No, not all countries use it. This system is common in Europe, but many non-European countries also recognize and process it.
No, it is an international standard that identifies your account abroad. The account number is its local equivalent.
IBAN identifies a bank account, while the SWIFT code identifies a specific bank. Both are needed for international transfers.