What is IBAN?
IBAN is the acronym for International Bank Account Number. This refers to a kind of numbering system which was devised in order to recognize a bank account, no matter where the bank which maintains the account is located. This system was developed so that transactions involving bank accounts from other countries could be processed and managed.
Although the IBAN is commonly used in countries located in Europe, more countries from different parts of the world are now utilizing this system in order to make international transactions much faster and easier. The International Bank Account Number was first developed with the support of the European Committee for Banking Standards. This system was intended as a way of speeding up the bank transactions that occur among countries that are part of the European Union.
As time goes by, the basic format for the numbers in the sequence was agreed upon, and it was decided that the first two letters should signify the country where the bank account is. The next part of the sequence contains two check digits, while the last part of the IBAN indicates the basic bank account number. The last portion of the IBAN is normally created by the local bank and must adhere to certain standards of that country’s banking regulatory agency. The basic bank account number involves letters and numbers, and can have up to 30 characters.
One of the main benefits of the IBAN is that it can eliminate the confusion that may arise due to the varying practices and standards of different countries when it comes to identification of bank accounts. Because a uniform platform was established, the effort required to process bank transactions efficiently will be minimized. Lastly, this system can also be beneficial for bank customers because IBAN ensures that they will receive deposits faster and the payments they make will also be processed much easier.