What Is an IBAN Account and Why Is It Needed
IBAN allows harmonization of the payment space, and will also contribute to further planned modernization of the electronic payment system. People who have to receive a money transfer or transfer money from Europe for the first time will need to learn more about IBANs. So, we are here to help.
What Is an IBAN Account
IBAN is a customer's online account number with a bank or other financial institution, assigned under an international standard. IBAN code or IBAN account stands for International Bank Account Number, this is an international standard for the bank account number of the recipient of the money, developed by the International Organization for Standardization and the European Committee of Banking Standards.
Such an IBAN account is used following the requirements of the European Union Directive “On the mandatory indication of IBAN codes in payment instructions”. In addition, the IBAN code is the only identifier of the beneficiary's account for payments in any currency (USD, EUR, etc.) in favor of bank customers in the member states of the European Union.
Banks and other financial institutions are authorized to refuse payments in which account numbers are not in the IBAN account format. It entails both non-fulfillment of payments and withholding of a commission for the return of these funds.
An IBAN account opening is quite simple, but you need to know about the structure of the number. The standard structure of the IBAN should not contain more than 34 numbers or letters. The structure often looks like this:
- The first two characters – country code of the beneficiary's bank, consisting of letters (according to the standard);
- 3rd-4th character – only one unrepeatable IBAN code (according to the standard);
- The following 4 characters – the first 4 characters of the bank's Business Identifier Code;
- The concluding portion of characters – unique number of the client's account in the bank.
People open IBAN accounts in more than 45 countries of the world, including the European Union, its territories, and other countries.
When IBAN Is Required
When you make money transfers from a Genome (website https://genome.eu/) account to the countries of the European Union and the European Economic Area, as well as to the acceding countries, the IBAN code is required.