In many banking transactions, you might have heard about what is IBAN. Even though some of you might not too familiar with this termination, it is, however, important to understand.
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IBAN consists of several numbers, and each number will have an important meaning. To help you understand further about what is IBAN, the following paragraphs will give some explanations.
About What is IBAN
Those who curious about what is IBAN, it is an abbreviation of The International Bank Account Number. This number is a unique identifier that was developed by the International Organization for Standardization (ISO) and the European Committee for Banking Standards or ECBS (European Banking Standards Organization).
In the other words, an international bank account number, often known as an IBAN, is a standardized international numbering system that was established to identify a bank account held in a foreign country.
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The number begins with a two-digit country code, is followed by two numbers, and then numerous more characters that are either alphanumeric or numeric. Note that an International Bank Account Number (IBAN) does not replace a bank’s existing account numbering. But furthermore, rather, its sole purpose is to give additional information that assists in the identification of payments made internationally.
The rigorous standard ISO 13616 is used to determine eligibility for an IBAN. Since it was first issued, the IBAN has been restricted to use in the context of wire transfers between financial institutions based in Europe. Despite this, there are currently 171 countries around the world that use the IBAN due to the numerous advantages offered by this number.
Structure of IBAN Numbers
IBAN structure is quite specific, and each of the numbers will bring meaning. IBAN’s organizational framework is comprised of MN KT BBAN, which includes the following:
• The country code is denoted by the first two digits (DE), while the country code itself is denoted by the first two letters (MN). For instance, DE is the abbreviation for Germany, FR for France, and ES for Spain (Spain).
• A check code with the digits 00 through 99 is denoted by the letters KT (only code for checking).
• The bank code for that country is the next eight digits (for example, 10000000), which are the BBAN.
• Individual account numbers in that country begin with the next 10 digits (1234567890), which are shown here. Example: IBANs can have a maximum of 10 digits in Germany, 27 characters in France and Italy, and 16 characters in Belgium.
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Requirements of IBAN
The International Bank Account Number (IBAN) or what is IBAN came about as a result of different national standards for identifying bank accounts. The employment of different alphabetic forms to represent particular financial institutions, branches, routing codes, and account numbers frequently resulted in incorrect interpretations and/or the absence of essential information in financial transactions.
In 1997, the International Organization for Standardization (ISO) released the document ISO 13616:1997 to streamline this process. Shortly after, the European Committee for Banking Standards (ECBS) released a more condensed version, holding the belief that the initial flexibility given in the ISO version was infeasible to implement.
In the version used by the ECBS, only letters in uppercase were permitted, and the length of the IBAN was predetermined for each country. The original ECBS version has been superseded since 1997 by a subsequent revision known as the ISO 13616:2003.
However, it does not specify any internal procedures, including but not limited to file organization techniques, storage media, or languages. A subsequent version in 2007 stipulated that elements of IBAN must facilitate the processing of data internationally, in both financial environments and among other industries.
Advantages of IBAN
There are several important advantages to reach whenever IBAN is used. At the moment, IBANs are only utilized in financial transactions that take place between domestic banks and banks located in European countries. You are going to need the following information to transfer money to European banks:
• The complete name of the person who will benefit from receiving the money.
• The IBAN of the individual who will be receiving the funds.
• Number of the SWIFT or BIC transfers used by the recipient bank.
How IBAN Works
What is IBAN is some numbers begin with a two-letter country code. Those are followed by two check digits and can have as many as 35 alphabetic characters before reaching their maximum length.
These alphabetic and numeric digits are what’s referred to as the basic bank account number (BBAN). It is up to the banking association of each nation to decide which BBAN they will choose to use as the benchmark for their country’s bank accounts.
When sending money from one bank to another, especially across international boundaries, you will need to utilize an IBAN. So that later it will help to complete any interbank transfers or wire transfers.
Those are all the explanations about what is IBAN. Through the paragraphs above, at least it will figure out the abbreviation of IBAN and the meaning of each digit number in it.
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Furthermore, the advantages of the IBAN also knowing well through the above information. So that in case someone needs to make money transferred to other countries, then they wouldn’t have difficulties with the IBAN. Furthermore, it will ease the transaction by having general knowledge about this number.