The world of international banking can be confusing because there are usually so many acronyms and terms thrown around, and it’s easy to lose track of what means what if you are new to international transactions.
Some of the most common terms you’d hear being used are IBAN, Swift Code, BIC code and Routing number. This article breaks down what each term means and how they work.
What is IBAN?
IBAN is an acronym for International Bank Account Number. It’s a globally accepted code consisting of up to 34 letters and numbers to help banks worldwide process cross-border payments quickly and easily.
If you are sending money across borders, having the IBAN of your recipient is what helps to ensure that your money transfer is delivered to the correct account. Basically, the IBAN serves as an identifier for your recipient’s bank account.
The IBAN system for payments is popular and widely used across Europe, North Africa, the Middle East, and the Caribbean. However, some countries like the United States, Canada, Australia, and New Zealand use a different system for handling international payments.
What an IBAN looks like
An IBAN is usually made up of:
A two-letter country identification code.
Check digits.
Bank code.
Sort code.
Account number
Here is an example of what a UK IBAN would look like:
What is a SWIFT code?
SWIFT is an acronym for Society For Worldwide Interbank Financial Telecommunication. In international transfers, What a SWIFT code does is that it serves as the identifier for the specific bank a transfer is supposed to be delivered to.
The significant difference between an IBAN and a SWIFT code is in this. While an IBAN identifies the specific bank account a transfer is to be delivered to. A SWIFT code only identifies the bank.
SWIFT codes are also known as BIC (Bank Identifier Code) and the two terms are used interchangeably.
What a SWIFT Code looks like
Unlike an IBAN, a SWIFT code usually consists of 8-11 letters and numbers that provide the following information:
Bank code.
Country code.
Location code
Branch code.
Here’s an example of what a SWIFT code would look like:
What is a Routing Number?
A Routing number is a nine-digit code used to identify the specific bank involved in a domestic transfer within the United States. For more context, a routing number indicates the bank an account is held in, while the account number serves as the customer identifier at the bank.
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