IBAN and BIC: what do they mean and why are they important?

IBAN and BIC are both crucial pieces of personal information which enable us to make transactions locally and internationally. When we want to set up a recurring direct debit or make a one-off transaction, we need our IBAN and BIC to make it happen. But what do these terms and their corresponding numbers actually mean?

In this blog post, we’ll go over the IBAN and BIC: what they mean, which countries use them, why they’re important, and we’ll break down the numbers that make up each one.

IBAN stands for International Bank Account Number and is the internationally recognised format for personal and commercial bank accounts.

The IBAN is used to facilitate transfers between banks and financial institutions. In the SEPA zone, you are required to supply your IBAN but not always your BIC. So, when using a business banking account or personal banking account to send money to a recipient, you will need the IBAN of your recipient.

A BIC or Bank Identifier Code is also referred to as a SWIFT/BIC or a ‘business party identifier’. Instead of referring to the individual account holder the way the IBAN does, the BIC signifies the financial institution or bank involved in the transaction. The relevant financial institutions in a transaction use this information to securely transmit information between banks, via the BIC’s standardized coding systems.

There are two types of BICs: connected BICs, which have access to the SWIFT network, and non-connected BICs, which are used for reference purposes only.

The IBAN is mandatory in the following countries:

In the following countries the use of an IBAN isn’t necessary, but it is recommended to obtain and use one:

IBAN and BIC are necessary information for making transfers between financial institutions and individuals. They provide the necessary information for different payment methods between account holders and banks to facilitate the transactions safely and securely.

When transferring an individual account holder, you likely won’t need the recipient’s BIC. Being a business party identifier, the BIC becomes necessary in the following situations:

• Financial transactions
• Client and counterparty databases
• Compliance documents

Among many other situations. BIC is usually necessary when you are making a transfer outside of the SEPA zone, across SWIFT international boundaries.

The numerical codes in both IBANs and BICs are both systematized according to regional and standardized structures.

IBANs have 34 characters, both numerical and alphabetical:

SWIFT codes consist of up 8 to 11 characters:

• IBAN and BIC codes are crucial pieces of information that allow financial transactions to take place.
• IBAN stands for International Bank Account Number and identifies the individual recipients and senders of the funds.
• BIC stands for Bank Identifier Code and identifies the bank and branch responsible for the transaction taking place.
• Your IBAN is necessary for individual transactions, and your BIC is necessary for financial documents and business to business (B2B) transactions.
• The structures of IBAN and BIC numbers reveal things like location, bank, and individual account number, all of which is necessary to complete a transaction.

https://remitr.com/blog/what-are-iban-codes-what-countries-use-them/

https://www.swift.com/standards/data-standards/bic-business-identifier-code