An International Bank Account Number (IBAN) is an internationally recognized code you may need for sending or receiving overseas money transfers.
An IBAN is one of the requirements for cross-border payments, depending on which country you're sending to. This sparks the question, what's an IBAN? Simply put, an International Bank Account Number is a unique code that identifies a specific bank account. When making cross-border payments, an IBAN works to verify account data to ensure your money arrives quickly and securely at its destination.
How does an IBAN work?
IBANs are a standardized international numbering system. This numbering system simplifies bank account identification to minimize cross-border transaction errors. Research shows that using IBANs reduces transaction errors to under 0.1% of total payments. Hence, using a unique identifier for overseas bank accounts has become an internationally agreed method for streamlining communication and processing cross-border transactions.
That means you'll need to know your beneficiary's IBAN code before sending money to an IBAN region. You'll also need to provide information, such as:
Bank Swift code
Reason for transfer
Your international money transfer provider will use the IBAN to check the country of origin and identify your beneficiary's account number. They will also use the IBAN to confirm that your bank details are accurate. All this safeguards your funds and speeds up your international payments.
What countries use an IBAN system?
IBANs aren't used across the entire world. For example, the IBAN registry published by SWIFT shows the IBAN format of each country, and only 82 out of 195 countries in the world have implemented the IBAN.
Since Eurozone banks originally adopted the IBAN, most European countries use this numbering system, which later became an international standard under ISO 13616:1997. Countries that use the IBAN include the United Kingdom, France, Italy and Germany.
Countries like Canada, the U.S. and Australia don't support the IBAN system. However, these countries can process payments to IBAN regions.
Breaking down an IBAN code
IBAN codes have a standardized format and can contain at most 34 characters/digits. Here are three examples from different countries:
You can simplify these IBAN codes to come up with a generic form, AA-BB-CCCC-DDDDDD-EEEEEEEE. In that case, AA is the country code, BB is the check number, CCCC is the bank identifier, and EEEEEEEE is the basic bank account number, BBAN.
Keep in mind an IBAN is not a bank account number or sort code. Instead, an IBAN contains the bank account number plus extra information to quickly identify individual bank accounts for cross-border payments.
IBAN vs. SWIFT codes
IBAN codes identify individual bank accounts and the given country. They contain up to 34 characters. On the other hand, SWIFT/BIC codes identify a specific bank or financial institution in an international transaction and have 8-11 characters.
SWIFT, the global network that processes international payments, is also responsible for standardizing the formats for the IBAN system. IBAN and SWIFT codes are internationally recognized and designed to ensure smooth international money transfers.
Finding your IBAN
If you're receiving money in an IBAN country, your sender will ask for your IBAN. Check your banking statement or log onto your online banking platform to find it. You can also use an IBAN calculator. If you're the sender, ask your beneficiary to confirm the IBAN.
Getting this number right is crucial to avoid international payment difficulties, such as invalid transactions, extra costs and delayed transfers.
Got your IBAN? Send money abroad today
An IBAN is a topic of interest when sending payments to IBAN regions. This numbering system makes life easier for you by preventing errors in international transactions, helping you avoid hassle.
That said, if you need an IBAN for international bank transfers, you'll also need to consider the associated costs, such as exchange rate margins and transfer fees. The costs are bound to be high when using a bank because banks charge hefty exchange rate margins and expensive transfer fees.
Thankfully, there are alternatives – currency specialists like MTFX – with exchange rates 3-5% lower and affordable transfer fees, so your beneficiary gets more than your bank offers.
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Who can use the MTFX payment service?
Individuals and businesses who need to send money in foreign currency internationally can use MTFX’s services. The beneficiary of the transfer must have a bank account for the funds to be paid into.
Personal clients usually use our services to transfer money between their own accounts in two different countries.
Business clients usually use our services to transfer funds to suppliers, fund international operations, or repatriate overseas earnings.
Why should I use MTFX and not my own bank?
MTFX offers currency exchange rates that are 2-5% better than those offered by the banks. Personal clients usually save hundreds of dollars per transfer and for larger transfers, the savings can run into the thousands.
We also offer excellent customer service, dedicated currency specialists, and a 24/7 online platform with best-in-class technology that allows you to complete transfers from any device virtually anywhere in the world.
Business customers save with better currency exchange rates and proven solutions geared towards managing and mitigating foreign exchange risk. Our solutions include forward contracts, market orders, rate alert services, and much more - all backed by great technology and great people.
How do customers send funds to MTFX?
Funds can be transferred via wire transfer, Electronic Funds Transfer (EFT), or ACH payment services. MTFX maintains bank accounts in all major currencies with highly-rated banks. Our banking infrastructure ensures that you can transfer funds to us quickly and securely.
How long does it take MTFX to transfer funds?
Our global network of banking partners allows us to get funds to virtually anywhere in the world quickly and efficiently. Most wire transfers from MTFX will be received by your beneficiary within 24-48 hours. MTFX also offers same-day transfers that are almost instantaneous, as well as low-cost in-country payment services for your less urgent transfers. For further information please speak to one of our currency specialists.
Please read the following update before logging in to your MTFX online account
We have updated our online dealing system to provide you with better functionality, more unique tools and an overall enhanced client experience. MTFX Online 2.0 is now available for your dealing needs. You can begin using our enhanced online portal today.
Please note that the traditional portal will be available for use until MAY 30th 2021 at which point it will be decommissioned.