Difference Between Swift Code and IBAN Number

Edited by Diffzy | Updated on: September 03, 2023

       

Difference Between Swift Code and IBAN Number

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Introduction

IBAN (International Bank Account Number) and SWIFT (Society for Worldwide Interbank Financial Telecommunication) Code are two crucial aspects of any transaction that is taking place beyond the border of one’s country,i.e., between two countries. Every International transaction needs these two codes/numbers so as to successfully complete those transactions. Any person sending or receiving funds to or from abroad must have knowledge of the SWIFT Code and IBAN. SWIFT Code lets us identify the bank during an international transfer, and an IBAN identifies the individual’s bank account to whom that account belongs. To secure any transaction domestically, there are many measures that can be taken within one's country, but to perform a transaction between two countries, one has to take full care that it reaches out to the correct hands, and for that extra precaution, a SWIFT Code and an IBAN number must be entered correctly for the smooth running of transaction.

SWIFT Code vs IBAN Number

A SWIFT code is that code which recognizes the bank that is involved in a particular transaction which is being done either to send or receive money from a foreign country, whereas an IBAN is associated with that individual’s bank account who is participating in that transaction. Both of them are of utmost importance while carrying out any international transaction as they play a pivotal role in the uninterrupted running of transactions in the international financial market.

SWIFT Code, on the one hand, tells us where to pay, and IBAN identifies who to pay. Among the two, the SWIFT Code is the one that is usually used since it provides a broader view, and IBAN is most commonly used in the European Union. Though both of them have their own elements, the SWIFT code provides a wide-ranging idea.

Difference Between SWIFT Code vs IBAN Number in Tabular Form

Parameters of ComparisonSWIFT CodeIBAN
Definition of the codesSWIFT Code mentions the bank in a transfer process between two countriesIBAN mentions an individual’s bank account who is involved in that particular transaction
Characters of the codesSWIFT Code involves 8-11 alphanumeric characters. It has four letters to identify the receiver’s bank, a country code of two letters, and a location code of two-digitsIBAN involves 32 alphanumeric characters that include a two-digit country code and a two-digit checksum
Usage as per locationSWIFT Code is the default standard that is used by many banks and financial institutions across the globeIBAN is commonly used while performing transactions in the European Union and its neighboring countries
Main CharacteristicSWIFT Code Used to identify a bankIBAN is used to identify an individual’s bank account in that particular bank
Messaging systemSWIFT Code can act as a messaging system that enables banks to share financial dataIBAN does not have any such system
Information providedSWIFT Code just shows an outline as it provides the details of the bankIBAN shows deep pieces of information and provides all the details of the individual
ExamplesAAAABBCCDDDFR12345678923488963D567401

What is a SWIFT Code?

A SWIFT (Society for Worldwide Interbank Financial Telecommunication) Code is a code that identifies a particular bank for which a specific international transaction is being carried out. It is a universally accepted standardized code that is used by almost every country so that the transaction can be carried out smoothly. It shows some basic information like the name of the bank, the name of the country, and the name of the receiving branch. By using this code, funds can easily and securely be transferred. It also permits banks to share crucial financial data and information relating to money transfers.

Structure of a SWIFT Code

A SWIFT Code consists of 8-11 alphanumeric characters, involving a country code of two digits and a checksum of two digits. Let’s take an example of 11 characters to get a deep understanding of a SWIFT Code.

Ex: AAAABBCCDDD

In this SWIFT Code, the first four characters signify the bank code; the next two characters show the country code, the next two show the location code, and the last three show the branch code. However, the branch code is optional in a SWIFT Code.

How Do I Find A Bank’s SWIFT Code?

The SWIFT Code of the bank can be found either on the bank statement or on the bank's website. It is important to copy or note down the exact SWIFT Code and check it once so that no mistakes can be made. It must consist of 8 to 11 characters. When you are transferring the money, you’ll need the SWIFT Code of the bank to which the money is being sent. So you can either find it out yourself or ask the recipient to provide you with the bank’s SWIFT code. You’ll also need the SWIFT Code while receiving money from another country, so make sure that you provide the payer with your bank’s SWIFT Code since they will need it when transferring the money to you.

Is It Safe To Give Out A SWIFT Code?

Giving out your SWIFT Code is generally safe as it cannot provide information about an individual. Also, in SWIFT Codes, encryption is done to protect data that is sent across the network. This code is used to identify an international bank and verify the transaction and is used by someone sending you the money. So, giving out the SWIFT Code of your bank is not dangerous, but one must have it only to the required person.

Why Was a SWIFT Code Developed?

A SWIFT Code was developed for many reasons, one of which was for the growth of the e-commerce industry as the organizations required having a faster and more reliable way to conduct transactions outside of their country's borders. Also, it provides a safe place for transactions regardless of the type of device being used. Lastly, many financial institutions can interact with each other around the world using the same set of regulations, resulting in a more secure and efficient system for everyone.

What is an IBAN Number?

IBAN (International Bank Account Number) is a globally recognized and accepted number that is used to identify an individual’s bank account while carrying out a transaction between two different nations. While receiving or transferring money from one country to another, IBAN shows the bank account of a person, his/her country code, bank code, etc. It is a common practice in the majority of countries to identify an individual’s bank account through IBAN or International Bank Account Number. IBAN lets you check how accurate one particular transaction is, and it secures the transfer from one bank in one country to another country. Though it is used in many countries, The United States and Canada do not use this. Despite this fact, they recognize IBAN and process all international transactions involving IBAN.

Structure of an IBAN Number

An IBAN involves 32 alphanumeric characters that include a country code of two digits, a bank code, a branch code, an account number, and a two-digit checksum. This piece of information is enough to know the individual bank account, bank as well as the country. Let's take an example of an IBAN to get a deep understanding.

Ex:FR12345678923488963D567401

The first two letters in the above example show the country code, the next two show the check digits, the next five show the bank identifier, the next five show the branch identifier, the next eleven show the account number, and the last two digits are the check digits.

How do I get an IBAN Number?

An IBAN number is required while you are transferring money internationally. If you are receiving the money, then you must provide your IBAN number to the payer, or if you are paying someone else, then ask them their IBAN number. You can get your IBAN number by getting in touch with your bank or by talking to the representative via call or text by providing your basic details. Another method by which you can get your IBAN number is by finding it on your bank statements. It must begin with two letters and have 14-30 numbers in it. You must check the IBAN number before providing it to anyone else so that the transaction can be done smoothly. You can also get an IBAN number through an online IBAN generator and calculate your IBAN code.

Is It Safe To Give Out An IBAN Number?

IBAN numbers only provide limited details of your bank account as it only contains the specific information of your country, bank, and your account, and nobody can actually dive into your account to breach its privacy, so it's safe to give your IBAN number to anyone. It only shows the details which are required to send the money to you and does not reveal a lot of personal details of an individual's bank account. However, one must be careful while providing it; make sure you give it to the right person who is transferring the money so that it is not exposed to many people, and it is always advisable to be cautious while providing any of your personal information to anyone.

History of IBAN Number

The IBAN number originated from) the European Committee for Banking Standards in 1977, and with time, it also became a norm across some regions of Europe in around the 2000s. Before the IBAN number, there were different codes for the identification of bank accounts, which created a lot of confusion for users. So, IBAN made it easy for different countries to rely upon one number for referring to an individual's bank account.

Which Of The Two Do You Require During An International Transaction?

A SWIFT Code and an IBAN number, sometimes both or sometimes one of them, are required for transferring money from one country to another. In a country that does not require an IBAN number, a SWIFT Code might be enough, but in many cases, both of them are required. There might be cases when you don't require either of them, but mostly, the SWIFT Code is compulsorily required to carry out any international transaction. Both the SWIFT code and IBAN number that is required are of the receiving party who is receiving the money. One must check it and confirm it with the receiver of the funds so that there is no mistake while carrying out the transaction and the money reaches the correct person.

Main Difference Between SWIFT Code and IBAN Number (In Points)

  • A SWIFT Code helps in identifying one's bank account, whereas an IBAN number helps in identifying an individual's account in that particular bank
  • A SWIFT Code is used by almost all countries, whereas an IBAN number is most commonly used in the European region and its neighboring nations
  • A SWIFT Code contains 8-11 alphanumeric characters, whereas an IBAN number contains approximately 32 alphanumeric characters
  • A SWIFT Code just shows an outline of someone's bank account; however, an IBAN number shows the exact details of someone's bank account
  • A SWIFT Code can act as a messaging system between banks, whereas an IBAN cannot do so

Conclusion

A SWIFT Code and an IBAN number are two codes that are important for the successful completion of any international transaction. Both are the codes to identify another bank. The primary difference between the two is that a SWIFT Code tells you about a country's bank account and its name, whereas an IBAN number provides you with information about an individual's bank account. Any person performing any transaction internationally must have knowledge of these two codes and should know from where they can acquire these codes. You must remember that the SWIFT code and IBAN number that you write are of the person who is receiving the money and not the one who is paying it. So, if you are the receiver, then you must provide it to the payer, and if you are paying the money, then you should ask the receiver for his/her SWIFT Code and IBAN number. Both of them hold equal importance and must be written carefully without any mistakes during a transaction.

References

  • https://www.worldfirst.com/uk/help-support/iban-versus-swift-code/
  • https://www.westernunion.com/blog/en/us/swift-or-iban-which-do-i-need-for-money-transfers/
  • https://www.bookmyforex.com/blog/what-is-an-iban-number/
  • https://www.payset.io/post/whats-the-difference-between-swift-bic-and-iban-numbers
  • https://statrys.com/blog/swift-vs-iban
  • https://wise.com/us/blog/iban-vs-swift

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"Difference Between Swift Code and IBAN Number." Diffzy.com, 2024. Thu. 29 Feb. 2024. <https://www.diffzy.com/article/difference-between-swift-code-and-iban-number>.



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