DEFINITION of International Bank Account Number - IBAN
An international bank account number (IBAN) is a standard numbering system, developed to identify bank accounts from around the world. Banks in Europe originally developed the system to simplify transactions involving bank accounts from other countries.
An IBAN won’t replace an account number; rather, this is an additional number, with further information, which helps in identification for overseas payments.
One can find his or her IBAN on a personalized account statement.
BREAKING DOWN International Bank Account Number - IBAN
The IBAN number consists of a two-letter country code, followed by two check digits, and up to thirty alphanumeric characters. These alphanumeric characters are known as the basic bank account number (BBAN). It is up to the banking association of each country to determine which BBAN they will select as the standard for that country's bank accounts. Currently, only European banks use the IBAN although the practice is becoming popular in other countries.
In the register of countries, currently using the IBAN system, several examples are as follows:
- Albania: AL35202111090000000001234567
- Cyprus: CY21002001950000357001234567
- Kuwait: KW81CBKU0000000000001234560101
- Luxembourg: LU120010001234567891
- Norway: NO8330001234567
The History of the IBAN
The IBAN developed out of diverging national standards for bank account identification. Varying uses of alphanumeric forms to represent specific banks, branches, routing codes, and account numbers often led to misinterpretations and/or omissions of critical information from payments.
To smooth this process the International Organization for Standardization (ISO) published ISO 13616:1997 in 1997. Shortly after the European Committee for Banking Standards (ECBS) published a smaller version, believing the original flexibility allowed in the ISO version was unworkable. In the ECBS’ version, they allowed only upper-case letters and a fixed length IBAN for each country.
Since 1997, a new version, the ISO 13616:2003, replaced the initial ECBS version. A subsequent version in 2007 stipulated that IBAN elements must facilitate the processing of data internationally, in both financial environments and among other industries; however, it does not specify any internal procedures, including but not limited to file organization techniques, storage media, or languages.