What is an IBAN account?
IBAN, or International Bank Account Number, is basically having a global account. It is used to identify bank accounts in international locations across borders. It is mandatory to have an IBAN when you make international payments. It includes both the bank account number as well as an identification code for each bank. IBAN is a unique international code that identifies the beneficiary’s bank account worldwide. This is not a new account number. It’s merely an ungraded digital version of your current account.
An IBAN is composed of an alphabetical country code followed by two numbers and up to 35 characters for the bank account number. An IBAN is used worldwide to identify and recognize customers’ bank accounts. More than 54 countries use IBAN accounts today, mainly from the European Union, UAE, and Kuwait.
Essential Features of IBAN accounts
* An IBAN refers to a Straight Through Processing (or STP) of Electronic Payments system. This system reduces the number of delays and additional costs associated with account numbers.
* Implementing IBAN will increase efficiency in the processing of remittance-related transactions. It reduces the risk of transcription errors.
* IBAN accounts allow for faster processing of funds transfers.
* Banks are usually required to know the exact IBAN number at the time of fund transfers. They verify that the IBAN is accurate or not before making the funds transfer. This makes it easier to transfer funds from one location to another. It can be used to send and receive both international and local funds transfers.
* IBAN is free to use, but you will need to pay transaction processing fees.
Online banking makes it easier for IBAN customers to transfer funds. It lowers the monetary value while increasing operational efficiency.
Use of International Bank Account Number (IBAN) accounts
International Bank Account Numbers are required for electronic payments. If you have an accurate and current IBAN, you can send and receive electronic payments internationally as well as locally. You can only send an IBAN payment to another country if that country has IBAN facilities. To be able to transfer funds successfully, both parties must have an International Bank Account Number (or IBAN account).
Incorrect IBANs can have devastating consequences.
If you make an error or misunderstand the IBAN information, the receiving bank will apply a charge, and your IMT could be rejected. You will have to pay the amount or get your money back. Before you make any fund transfer transactions, ensure that your IBAN is correct.