Making Sure Money Gets to the Right Place



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There are thousands of banks in the world, and they carry out hundreds of millions of transactions for their customers each day. With so much money moving around, how do financial firms make sure it gets to the right place, and the right person?

International finance is complex and the jargon that goes with it can often be difficult to understand. To help unravel the mystery, we have defined some basic international banking terms below.

What’s an IBAN?

An IBAN is an International Bank Account Number made up of numbers and letters in a standard format to identify bank accounts. Almost one hundred countries now use IBANs, and its structure has been agreed upon internationally to make banking transactions easier and help reduce transcription errors.

The purpose of the IBAN system is to harmonize the different standards for bank account numbers to reduce confusion when carrying out international transactions. Before IBANs existed, important routing information was frequently missing when payments were made and that meant delays and errors.

Today, IBANs are used by many countries, including all the countries belonging to the European Union. But not all countries use IBANs. The U.S., Canada and India, for example, do not currently use them, although they do recognize the system and process IBAN transactions.

All IBANs include the following information:

  • Country code – a two-letter code specific to each country that is placed at the beginning of the IBAN, for example, IT for Italy, PK for Pakistan, QA for Qatar.
  • Check number – A two-digit code used to check for errors.
  • Bank identifier – a four-digit code that is unique for each bank in the country indicated.
  • BBAN, Basic Bank Account Number – the individual account number assigned by each bank. The length of the account number varies by country and can be up to 24 digits long.

The IBAN standard in use today was first developed in 1997 and updated in 2020 by the International Standards Organization (ISO).

What is SWIFT?

SWIFT, the Society for Worldwide Interbank Financial Telecommunication, was founded in Brussels in 1973 as a standard for international bank transfers.

A bank’s SWIFT or BIC, Bank Identifier Code, is an international code assigned to each bank that uses the system.

Until 2003, when the International Standards Organization published standards for the SWIFT network that were generally accepted by the industry, each party in a transaction had to reach an agreement on how to identify the types of transactions and accounts. Now, the formatting for bank and branch numbers is standardized for the banks that use the SWIFT system, although the individual bank account number is not part of the SWIFT standard.


IBANs and SWIFT codes are sometimes used together. In some cases, the recipient bank’s SWIFT code may be requested even though an IBAN has been provided. If you are sending money through your bank to a country that does not use IBAN, the recipient bank’s SWIFT code will likely be needed.

SEPA and ACH help speed up regional transactions

SEPA is the Single Euro Payment Area and it establishes a unified European market for payment mechanisms. Its goal is to make sure that payments within the 27 member states of the European Union, the countries of the European Free Trade Association, and the UK take place as seamlessly as those within a single country. Consumers, businesses and government entities who make payments by direct debit, card transfer, and credit transfers use the SEPA system to make cashless, cross-border payments. SEPA was first introduced in 2008. As of 2020, there are 36 countries in SEPA.

The Automated Clearing House (ACH) was created in 1974 to smooth payments in the U.S. ACH payments are routed and processed by the U.S. Federal Reserve or by a private company called The Clearing House which is owned by over two dozen of the world’s largest commercial banks. In 2021, the ACH network processed over 29 billion payments worth a total of more than $72 trillion.

International finance may be complex but at Ria, we work hard to make things easy. An IBAN or a SWIFT code is not necessary to send a cross-border money transfer, depending on which payment and delivery method you choose.



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