What is IBAN?
An IBAN is an International Bank Account Number. These numbers are used to help identify bank accounts in different countries. This type of account number is an International Standard. Within the European Economic Area, all banks are mandated to use this number. However, banks outside of the European Union are not mandated to adopt this number.
The main purpose
The IBAN format was originally used by those in the European Union. But it has now been adopted in many other European countries and is starting to be adopted throughout the Middle East. The first part of the number is the country code. The number then has two check digits with a country-specific Basic Bank Account Number. The format can have up to 30 characters.
The sanity check and routing number
With the IBAN, it is possible for an individual initiating a transaction to perform a sanity check. Sanity checks can be used to make sure that the number is possibly true. The number can also contain routing information.
Benefits of this number
The benefits of this format is that it can validate a lot of information at the point of data entry. Particular countries have a specific set of characters, so those without the right number of characters can be quickly identified. The country code can be easily verified and the account number, country code and bank code can be assessed instantly to determine if they are compatible with the check digits.
Support for international payments
By consolidating the different types of account numbers, the European Union Banking community can more easily support payments throughout the European Union. This can help facilitate trade among different countries and contribute to economic growth.
As with any account, the International Bank Account Number can pose security risks when the number is acquired by the wrong individuals. For that reason, most businesses will choose to publish the number of their transit accounts.
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