Why is it so important to have an International Bank Account Number (IBAN)?

by | Feb 13, 2023 | Blog

IBANs, which stand for “International Bank Account Number,” are special numbers that banks use to make it easier to send money across borders.

It cuts down on typing mistakes and makes it easier to find account information, which speeds up processing and makes it easier to move money.

What does IBAN stand for?

The first two characters of the International Bank Account Number (IBAN) are the country code. The next two characters are check digits, and the last 30 or so characters are the basic bank account number and other information about the bank and the account holder. The International Bank Account Number is a string of 34 letters and numbers. In 2007, ISO standards accepted the IBAN and made changes to it. (BBAN).

What You Need to Know About International Bank Account Numbers (IBAN)

ISO and SWIFT came up with the International Bank Account Number (IBAN) standard to make it easier to send money between countries. It is common practice to give each bank account a name. The number also made it possible for these international financial transactions to be handled faster because there was no longer a chance that a person would make a mistake while typing it.

The International Organization for Bank Account Numbers

In the international bank account number, you can find the following:

  • A “country code” is a code unique to a certain nation.
  • A check number is a two-digit check that looks for mistakes in number identification.
  • The “bank identifier” is the bank’s unique number that can be used to find it
  • The account number lets you know which bank account it is.

Why did they make the IBAN?

IBAN was made to reduce mistakes and improve the way international payments are checked. This can be done by lowering the number of payments that are turned down, transfers that take too long, and the fees and taxes that come with them.

Who needs an IBAN number?

IBAN was initially developed to make sending and receiving electronic payments between banks in the Eurozone simpler.

Since then, it has spread to every part of the world. You might still need to use a different system, like SWIFT, because not all banks and regions have adopted the standard. The International Bank Account Number (IBAN) is not used to send money within North America, Australia, or Asia. Instead, these countries will only use the IBAN to send money to another country that has also set up an IBAN.

Why is IBAN so important?

Before IBAN, transferring money between banks and branches often took longer because of the need to sort through different numbers and characteristics. The extra costs that came about because of this were also higher.

According to the International Organization for Standardization (ISO), the number shows the location and the exchange between countries and industries. It does not show the account holder’s or the bank’s internal procedures, organizational strategies, or other sensitive information.

No matter what kind of business you run, you need to be able to process payments at all times. It doesn’t matter where in the world a company is based, as long as it’s not in Europe.

Businesses can run into a lot of problems with the way banking has been done and solved in the past. This may require a time-consuming search for the best bank account for your business’s needs, the sending of invoices to clients in different countries and currencies, and the completion of laborious procedures to reconcile transactions involving different currencies.

These are some of the benefits of this type of financial instrument:

  • A high level of comfort with all aspects of settlements; 
  • A shorter time to process payments;
  • The ability to send invoices to customers in different countries; 
  • The capacity to pay substantial sums of money;
  • Online, you can convert currencies; 
  • Direct SEPA payments to any company operating in the EU; 
  • The ability to focus your efforts on growing and improving your business; 
  • Taking care of cash flow and liquidity;
  • Keeping an eye on the costs of managing multiple accounts and moving money between them will go down; 

How can I get an IBAN number?

With Ragapay, you can make your online business more visible on the Global Presence platform. Because every business is different, we can open accounts for both low-risk and high-risk industries.

We can help you get competitive rates and improve your company’s cash flow by giving you quick authorizations and safe services. By giving customers different ways to pay, you can keep them happy and make the checkout process quick.

  • Handheld Application Development
  • Competitive Pricing
  • Convenient
  • Accept a Variety of Payment Methods
  • PCI Compliant 
  • 24/7 Support

Conclusion

IBAN is essentially a number that identifies an account holder’s country, bank, branch, and account to which international funds transfers are directed. Not every country has incorporated IBAN into its money transfer system. Others use codes such as SWIFT, routing numbers, and IFSC. All of these routing systems are intended to make international money transfers quick, simple, and precise for both banks and individuals.