IBAN vs. SWIFT Code: Differences and Importance

When performing International transactions, several codes are needed to ensure the payment is delivered to the correct recipient. These codes include IBANs and SWIFT Codes. They identify accounts and banks and ensure that transfers overseas are secure and accurate.

This article will touch on the differences between IBAN and SWIFT Codes as well as the importance of each. We will also briefly discuss why businesses need to validate IBANs. Dive in when you’re ready.

What are IBANs and Swift Codes?

International Bank Account Number (IBAN) is a unique code that identifies bank accounts during international transactions. It begins with a two-digit country code, followed by two numbers, and some additional alphanumeric characters. Its primary function is to assist international banks in identifying bank accounts so they can receive and send payments overseas.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) code, also known as SWIFT number, contains 8-11 characters and is used to identify banks and financial institutions internationally. SWIFT is used interchangeably with Bank Identifier Codes (BIC). However, they mean the same thing and help to make secure payments such as international wires, international money transfers, and SEPA payments.

IBAN Vs SWIFT Codes: What is the Difference?

An IBAN consists of 15-34 alphanumeric characters depending on the country. This consists of a country code and a checksum that identifies the individual bank account, the bank, and the recipient's country. IBANs are usually used to perform transactions in the EU and surrounding countries. It is important to note that the United States and Canada do not use IBANs unless when sending funds to other countries.

A SWIFT code contains 8 to 11 alphanumeric characters. This consists of four letters indicating the recipient's bank, two letters indicating the country code, two digits indicating the location, and an optional three digits to identify the specific branch. This code does not give information on the account number of the recipient.

SWIFT codes are more global than IBAN. It is not only used by banks but also by other institutions such as clearinghouses and money brokers.

Examples of IBAN and SWIFT Codes

IBAN

In Turkey, an example of an IBAN is: “TR330006100519786457841326”.

“TR” shows that the account is located in Turkey, “33” determines if the other parts of the IBAN are correct, “00061” indicates the recipient's bank, “0519786457841326” is the receiver's account number.

SWIFT Code (4 digits)

In Barclays Bank, an example of a SWIFT code is: “BUKBGB220KP”.

The first four letters, “BUKB” is the name of the bank (bank code), the next two letters, “GB” is the country code, “22” is the location code, the last 3 digits, “0KP” indicate the head office of the bank.

How to Find My IBAN?

Some tips for finding your IBAN are:

1. Check your debit card. The IBANs of some countries are written on the bank cards, but it is not written in others.
2. Contact your bank to send it to you. If you are in a country that uses IBAN, your bank would be able to provide you with your details. You can also find it at the top of bank statements and your online banking app.

Does IBAN Contain Swift Codes?

No, an IBAN does not contain SWIFT Codes. It is used during international transactions to identify different bank accounts.

Is IBAN the Same as the Account Number?

No, IBAN is different from an account number. It is used primarily by international banks for the identification of bank accounts so it can be used to receive or send international payments.

Who Uses Swift?

SWIFT is not limited to only banks, it is also used by other financial institutions like:

• Corporates
• Foreign exchanges
• Clearing systems
• Investment Managers
• Money brokers
• Non-bank financial institutions
• Depositories

What is IBAN Validation?

IBAN validation is a process used to confirm the structure, format, and checksum of an IBAN to ensure it is correct before processing international transactions. This is a very important process that effectively reduces errors and delays in international transactions, prevents fraud, ensures the data entered is correct, and prevents additional cost.

Validation can be done using Greip’s IBAN Validation services which solves the problem of incorrect or invalid IBANs by carefully verifying the integrity and validity of provided IBANs through advanced algorithms and comprehensive databases.

FAQs

Do I Need Swift Code If I Have IBAN?

Yes, most international transactions require both IBAN and Swift codes. The reason for this is because;

1. IBAN identifies the specific account number for the transaction and ensures payments are made to the correct account in the financial institution.
2. SWIFT Code identifies the bank and where it is located, ensuring the payment reaches the right financial institution.

Some banks, however, perform international transactions using only the IBAN, these banks are in the SEPA region (Single Euro Payments Area) in Europe. Transactions involving other currencies aside from the Euro require SWIFT alongside IBAN.

Do US Banks Use IBAN?

Presently, the United States does not use the IBAN system. However, the bank accounts use the ABA routing numbers for national transactions and SWIFT codes for international transactions.

What are IBAN and Swift Code?

IBAN, International Bank Account Number is a code used to identify bank accounts during international transactions.

SWIFT Code is used during international payments to identify the banks, and their geographic locations as well as that of other financial institutions.

Does the UK use IBAN or SWIFT?

Yes. Banks in the UK use both IBAN and SWIFT for international transactions.

Bottomline

IBAN and SWIFT are very important factors which aid international transactions. They are usually used together for added accuracy but some countries use only SWIFT Codes. However, with either one or both, errors can come in when the wrong details are entered. This is observed and corrected using tools like Greip’s IBAN validation.

References

IBAN vs. SWIFT Code: What's the Difference?

What Is an International Bank Account Number (IBAN) and How Does It Work

What is SWIFT? Understanding the SWIFT System