IBAN Number Explained
How often do you think you need or use an IBAN Number? If you have a friend or family in a foreign country, you may have sent money to them on one or many occasions. Unlike the traditional methods, you can make good use of IBAN. However, your country and region must first use this universal payment system for you to use it for international money transfers. So, what is IBAN? How does it work? Should You Use IBAN? Please read on to get the answers to these questions and more.
What is an IBAN Number?
An International Bank Account Number (IBAN) is a universal numbering system that identifies an individual bank account engaging in an international transaction. Therefore, the number is unique to each individual and his account. Nonetheless, it comes with extra information regarding your transaction. Such include the specific bank account and the country where the bank is found in. IBAN helps the bank overseas identify your bank account to complete the transaction.
Notably, this system of numbering was developed as a means of simplifying transactions among bank accounts from different countries. Furthermore, it verifies the correctness of the details in a transaction. Remember, the IBAN is not a replacement for your bank account number. On the contrary, it contains extra information to help the overseas bank identify the payment.
Interestingly, not all countries use the IBAN system. For instance, the US and Canada only recognize it and process the transactions according to it, especially when sending payments to countries that use the system.
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Characters of IBAN Number
The IBAN comes in up to 34 letters and numbers. Remember, each set of characters in this number shares extra information with banks. The following are the components of an IBAN;
- Country code; This is the International Organization for Standardization (ISO) for a country that uses IBAN. This is usually a 2-letter code. For instance, FR represents (France) and DE (Germany).
- Check digits; They are made up of 2 digits. They act as a security layer and are given by the issuing bank or financial institution.
- Bank identifier; the code identifies the financial institution. If the bank has a branch, the bank identifier can give the financial institution’s particular branch.
- Basic bank account number (BBAN); the code identifying your account at a financial institution in another country. Notably, the format of BBAN may be different from one IBAN region to the other.
How Does an IBAN Number Work?
There are banking associations in each country. They have the responsibility of selecting their standard IBAN for their bank accounts. The IBAN comes in handy when there is a need to wire money from one bank to another in a different country. Therefore, it facilitates transactions across borders. However, some countries also use the IBAN system for domestic money transfers.
This means that when you have a cross-border to carry out, your bank runs through the characters of your IBAN through their database. This step is key to verifying the information. The system will then confirm both the sender’s and buyer’s accounts using a special algorithm. Successful payments are processed only after validation.
The use of this system first began in the Eurozone to facilitate electronic bank payments. It has a worldwide expansion. This, however, does not mean that all regions and countries in the world use the system. Currently, only around 82 countries are using IBAN. Those in North America, Asia, and Australia only use it when paying overseas countries using the system. They do not embrace it in their local money transfers.
The good thing is that IBAN reduces the occurrence of errors. Moreover, if you use this payment system, there are lower chances of having your payments rejected. Also, the system reduces transfer delays and any other related charges from the banks.
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Remember, you only use the IBAN when making payments. The system does not support withdrawals. Also, it is a safeguarding system. Why? It checks the data in your bank account before it makes international payments between banks. This is a means of verification during the process of the transaction.
Where To Find IBAN
So, where can you find this number? The following tips can help you find IBAN;
- If you are a customer of a specific bank, you can find IBAN in your bank statements as long as the region uses IBAN.
- Your debit cards; be keen to check this card in case your country displays the number on the debit card directly. However, this tip does not apply in all scenarios. Some countries do not display your IBAN on the cards.
- Contact your bank; If you live in a region that uses IBAN, you can contact your bank and ask for one. You will get the necessary details.
- Online; You can visit your online banking app to check if it has the number.
- Using an online IBAN generator; Since this coding system is universally recognized, the calculator tool can give you the IBAN.
Remember, if you haven’t opened a bank account yet, Bank.pro is here to make your work easier. With a ready bank account, finding out your IBAN doesn’t have to be a hassle. Additionally, you can easily find any bank at bankaccount.pro.
Safety of an IBAN Number
At this point, you are probably wondering whether or not using this payment system is secure. This is quite okay. After all, you don’t want to make a cross-border payment only for it never to arrive at its destination. The good news is that you can safely transfer your funds. Moreover, the IBAN system only allows for the payment of funds. What does this mean?
There will be no possible withdrawals carried out. Therefore, even if other consumers have your IBAN, they can only make payments into the account. However, they can neither take money out of it (withdraw) nor transfer funds from your account to theirs. Therefore, the funds in your account are secured.
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Open a Bank Account Today
IBAN helps simplify the process of sending money overseas. Besides, it offers a level of security to an individual’s funds. This is because it only allows payments but no withdrawals. So, if you have a relative or a friend in a country or region that uses IBAN, and would like to make send them some money, ensure you open a bank account. One of the best ways of opening a bank account for your international money transfers is by using Bank.pro.
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