Swift Code vs IBAN Code
For those who do not know, IBAN and SWIFT are codes used by banks worldwide to allow for easier and quick transfer of funds and also for easier identification of international bank accounts. Though they have similarities in formatting, there are difference is the purpose of IBAN and SWIFT codes that will be discussed in this article.
Before IBAN (International Bank Account Number) was invented, it was a cumbersome process for customers and small business owners to identify the bank and the branch to which they needed to transfer funds. Routing errors led to unnecessary delay of payments and banks also incurred extra costs because of these errors. IBAN was developed by the International Organization for Standardization (ISO) to facilitate financial as well as non financial transactions. Though IBAN was introduced for financial transactions within EU, the system was adopted globally as it was flexible. IBAN includes the country code, check digits, bank account number etc that reveals all necessary information. Validation of IBAN number is done using MOD-97-10 technique. In simple words, IBAN is an extension of your existing bank account number that allows for easier and faster international fund transfers. It eliminates undue errors and makes routing quick and efficient. If you have someone in a foreign country to whom you want to send payments, you can get your IBAN number from your bank and make international wire transfer of money in very little time.
SWIFT stands for the Society of Worldwide Interbank Financial Telecommunication and is in reality a banking industry intranet for worldwide communications and fund transfers. SWIFT was founded in 1973 in Belgium. Members of SWIFT are normally banks and businesses that name their own SWIFT codes. SWIFT organizes news between nearly 10000 banks across 200 countries daily. SWIFT code is an international standard for identifying a bank. SWIFT code consists of alpha numeric characters and has 8-11 such characters. The first 4 characters represent the bank, next two characters are for the country, next two contain information about location while the last three characters reveal the branch of the bank.
Swift Code vs. IBAN Code
• SWIFT code is for identification of a bank or business while IBAN is International Bank Account Number.
• IBAN is used by customers to send money abroad while SWIFT is used by banks to exchange financial and non financial transactions.
• IBAN allows for easier and faster money transfers worldwide.