IBAN
An International Bank Account Number (IBAN) is a standardised format for identifying a bank account in cross-border and, in many jurisdictions, domestic payments. It encodes the country, a check figure and the account details in a single string that can be validated before a payment is sent.
What it actually is. An IBAN is not a replacement for an account number but a standardised wrapper around it. Each IBAN begins with a two-letter ISO country code, followed by two check digits, and then a country-specific Basic Bank Account Number that typically contains the bank identifier, branch code and the domestic account number. The overall length is fixed per country but varies between countries, up to a defined maximum. The structure is governed by an international standard maintained under ISO, with a registry of national formats coordinated by the payments body SWIFT, which holds the role of registration authority.
How it works in practice. The two check digits are calculated using a modulo-97 algorithm across the rearranged IBAN. This lets a sending system verify that an IBAN is internally consistent before submitting a payment, catching many transcription errors at the point of entry rather than after a failed or misdirected transfer. The IBAN identifies the account; it does not on its own guarantee the account exists or belongs to the named party. For routing, an IBAN is often accompanied by a BIC, though within many European schemes the IBAN alone is sufficient to direct a payment.
Where it applies. IBANs are standard across the European Economic Area and are used widely in the Middle East and beyond, though adoption is uneven and some major economies do not use them domestically. Within the euro-denominated SEPA schemes, IBAN-only addressing is the norm and rules restrict surcharging or discrimination between domestic and cross-border euro transfers. Practitioners should note that an IBAN reveals the account's home country and institution but says nothing about currency; a single account may receive multiple currencies, and holding a country's IBAN does not by itself confer local residency or a local presence.