It is true that the number of people opting for international money remittance services is increasing. However, only a few are aware of the significant details related to international money transfer methods. You need to know different remittance methods and how they work if you send money abroad on a daily basis. Two things which most of the time people misunderstand, are – IBAN (International Bank Account Numbers) numbers and SWIFT (Society for Worldwide Interbank Financial Telecommunication) codes. These two are often considered the same, while they are not. Both of them are internationally recognized and standardized procedures for identifying a bank account when a remittance is transferred.
What is IBAN and how does it work?
As mentioned above, IBAN or “International Bank Account Numbers” is an internationally acclaimed method for checking bank accounts. IBAN offers an easy identification method for checking the address of the bank and the account number of the recipient. Through IBAN, the authenticity of the transaction details is verified as well. IBAN is responsible for facilitating a transfer of funds. It successfully investigates individual accounts that initiate remittances.
What is the structure of IBAN numbers?
An IBAN number is constructed with a series of numbers/characters, which represents a part of the money that is being transferred. In most cases, an IBAN number comes with fifteen to twenty characters. However, some countries even have 34 characters in an IBAN number. Following is the structure of an IBAN number –
- The country code
- Initial places come in the digit code
- Bank identified code – a code that is set up by an individual bank branch
- Branch code – a code that is assigned to an individual bank branch
- Account Number – Belongs to an individual
The codes change as per the country and branch codes.
What is the difference between SWIFT and IBAN numbers?
The SWIFT code identifies the banks while the IBAN numbers verify the account details. Especially, IBAN numbers verified individual accounts. Unlike the SWIFT codes, IBAN numbers have two country codes and they check the transfer details. SWIFT works more as a messaging network. SWIFT allows the banks to share varied financial data such as account details along with debit and credit amounts. Only then the IBAN numbers are produced and activated to further check the authenticity. So, you can say SWIFT and IBAN are related and IBAN is dependent on the former one.
The SWIFT facilitates the communication of transfers between the two banks. However, if there is no commercial relationship between these two banks, then SWIFT only facilitates the transfer and the amount is transferred to an intermediary bank. Unlike the lengthy characters of an IBAN, the structure of the SWIFT incorporate the following –
- A four-letter bank code followed by
- Two-letter country code followed by
- Two-digit location code followed by
- Three-digit bank code (optional)
You should be aware of these two numbers and their functionality when opting for an international money transfer. This information will help you from falling prey to scams or any unwanted circumstances.
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