Banks and other financial institutions make use of different kinds of identification numbers for a variety of reasons. Your bank account number, for instance, is unique and helps identify you as its account holder. Similarly, the transfer of funds between financial institutions requires the use of identification numbers to facilitate smooth flow of money. While banks in different countries rely on various codes, SWIFT codes and IBANs are among the most commonly used.
Before the introduction of international transaction standardization through these codes, there was no unified identification method that allowed banks in one country to identify banks and individual accounts from other countries. Without any standardization, ensuring that correct information was entered in international transactions was challenging and time consuming. Besides, delayed, missed, and incorrect payments resulted in inconvenience and added costs.
The Difference Between IBAN and SWIFT
The key difference between a Society for Worldwide Interbank Financial Telecommunication (SWIFT) code and an International Bank Account Number (IBAN) is that while the former is used to identify a particular branch of a bank or a financial institution, the latter is used to identify an individual account. Both are routinely used in carrying out international money transfers.
The use of SWIFT codes began in 1973. Assigned to financial and non-financial institutions, when assigned to the latter it is also referred to as a Business Entity Identifier (BEI). Banks use SWIFT codes to communicate with each other, and they facilitate quick and easy transfer of funds across international borders.
The SWIFT code of Citibank N.A., New York, NY is CITIUS33. Here, CITI denotes Citibank N.A., US represents the United States, and 33 is the code for New York.
If you wish to send money overseas, there is a good chance that you will need to provide the receiving bank’s SWIFT code. You may find your SWIFT code on your bank statement, by using your bank’s online banking system, or by speaking with a customer service representative.
International Bank Account Numbers (IBANs) help identify individual bank accounts when transferring money across countries. Originally adopted by the European Committee for Banking Standards, it is now looked upon as an international standard. While its use is fairly common in European counties, it has also been adopted by nations in the Caribbean and the Middle East.
If your bank uses the IBAN system, you may find your IBAN on your bank statement, by using your bank’s online banking system, or by speaking with a customer service representative.
While SWIFT codes and IBANs are commonly used in the world of overseas money transfers, they serve different purposes. If you plan to send money overseas, make sure you get these details from the recipient before initiating the process. Depending on the country you wish to send money to, you might need just a SWIFT code or an IBAN too.