The IBAN code.
The IBAN code is the identification code for the account number. The BIC or SWIFT code is the one that indicates the entities and branches. Why are these bank codes necessary to make an international transfer? Here we answer all your questions.
What is the IBAN?
It is made up of 4 initial characters and then the account number: 4 initial characters: country code (2 digits) + control code (2 digits). Example: BE49 (country code “BE” for Belgium) + control code (“49”). IBAN is the acronym for International Bank Account Number and is a bank code used to uniquely identify each current account in the Single Euro Payments Area (SEPA), which, according to the European Committee, comprises 34 countries (including the 28 countries of the European Union).
The account number.
The account number: this consists of the bank code, the branch code, two check digits and, finally, the bank account code (the last 10 digits). In total, 20 characters identify the account.
Just by knowing the IBAN code, a person can make payments or transfers in any of the SEPA countries in the same way as if they were making a domestic payment. It is therefore important to have this information, which can be found on any account statement or in the electronic banking applications of financial institutions, such as Wise, for example.
Also for payment or transfer outside the European Union.
If, on the other hand, you want to make a payment or transfer outside the European Union, also within the range of an international transfer, the information provided by the IBAN code is not sufficient. It is also necessary to notify the BIC code of the recipient institution.
But then, what is the BIC or SWIFT code?
SWIFT is an acronym made up of the initials of the Society for World Interbank Financial Telecommunication, a cooperative of financial companies, mainly banks, to which it provides services.
The BIC (Bank Identifier Code) or SWIFT code is used to identify the beneficiary bank of a transfer (or destination bank). It is an international alphanumeric code that can consist of 8 or 11 characters. However, the main reason for which SWIFT is generally known is that it is an international code that provides its partners with an encrypted messaging service that enables international funds transfers. SWIFT determines the bank codes that are required to make or receive a cross-border transfer.
Eight-character code: includes information on the institution, each country and the locality. Example: TRWIBEB1 is the BIC code for WISE, BE (country, Belgium) and Brussels (City).
Eleven-character code: in addition to those in the previous section, it includes the branch information in the last 3 characters. If the branch information is not included, it is understood to be the main branch of the entity. Example: TRWIBEB1XXX is the BIC code for WISE (bank), BE (country, Belgium), Brussels(City).
When an account holder makes an international transfer to another account holder, the sending bank generates an encrypted message (BIC or SWIFT code). This message indicates how the funds are to be sent to that customer, with all sorts of details (dates, currencies, charges, through which bank(s), etc.). It is the proof of the irrevocable execution of an international transfer, and provides security (and information) to the receiver.