Whether you’re selling goods or providing services, it’s very likely that at least some of the people you work with don’t operate in the U.S. Traditionally, making an international payment, especially in a business capacity, was a pain. Now you can pay all of your vendors online with Melio, regardless of where they are, using the same seamless process you already know and love. To do it, you’ll likely need an IBAN.
Wait, what’s an IBAN?
IBAN stands for International Bank Account Number. It’s a unique set of digits and letters representing a specific bank account in any of the 77 countries that use the IBAN system. It is typically used to facilitate cross-border transactions to the U.K., Europe, the Middle East, and the Caribbean.
Why is IBAN important for international transactions?
Each country has its own financial system which includes different formats for bank account numbers. These differences made international transactions confusing and often resulted in funds being lost or at the very least delayed, because of inaccuracies. The IBAN system was created to solve this problem, offering a clear set of globally accepted rules for codifying bank information, making transactions faster, safer, and less prone to error.
What does an IBAN look like?
An IBAN has up to 34 characters and typically includes:
- Country code
- Check digit code
- Bank identifier code
- Branch code
- Account number
The format and length of IBANs vary from country to country. If you’re paying a vendor in Germany, for example, you’ll get a 22-character code that looks like this: DE75512108001245126199. If they’re in France, on the other hand, it’ll be 27-characters long and look something like this: FR7630006000011234567890189.
You don’t have to worry about the specifics of what’s included in the number. The processing service you use will know how to match it with the right account, according to the relevant format. To be extra safe, you can verify the IBAN online.
Do U.S. bank accounts have IBANs?
No. IBAN is only used by U.S. banks to process outgoing payments to foreign bank accounts in countries that use the system. For incoming payments from other countries, U.S. banks use SWIFT codes.
Is IBAN the same as SWIFT?
IBANs and SWIFT codes (also known as BIC codes) are both a series of characters representing bank information. They differ, however, by geography. IBAN is mostly used in Europe while SWIFT is used in the U.S., Mexico, and Canada, among other locations. Another difference is that while an IBAN refers to a specific bank account, a SWIFT code is used to identify financial institutions and allow them to communicate account information.
Some payment processors and banks may need you to provide both an IBAN and a SWIFT code for the receiving account. If you make an international payment via Melio, you’ll be prompted to provide the relevant number, according to the payment’s destination country.
Is it safe to share IBANs?
In one word: yes. To get international payments, the account owner must give the payor their IBAN or SWIFT, depending on the system used in their country. This information can’t be used to access funds or perform any actions in the account. Since they can only be used to receive money, there’s no need to worry about security when exposing IBANs.
Where can I find my vendor’s IBAN?
An IBAN can easily be found by an account owner on their bank statement or banking website. If your vendor didn’t provide you with their international payment details but you have their full account information, you can use an online calculator to find their IBAN.
Now that you know what IBAN means and how to use it, go ahead and schedule your first international payment on Melio.