IBAN vs SWIFT Code: Key Differences Explained, With Examples

Facilitating international money transfers can benefit world economic trade as well as encourages foreign direct investment opportunities and eventually contribute to high worldwide economic growth.

Different institutions such as international organizations, and local businesses slowly expand their business operations across borders, they must ensure the ability to receive and send money overseas from customers, beneficiaries, or suppliers in global locations.

In such cases, SWIFT and IBAN become significant and necessary for sending money internationally.

We will look at the distinct differentiation between SWIFT and IBAN, and they are both inter-used to identify international bank accounts and cross-border payments.

What is an IBAN?

IBAN stands for International Bank Account Number which is a sort of identification number that is assigned to each bank account that can be referenced as a number whilst receiving or transferring money overseas.

International bank account number (IBAN) is a common practice and format for bank account numbers that are used in the majority of countries to identify the account owner's particular bank and their account.

The format of an IBAN number involves a two-letter country code, a two-digit country code, and up to 30 characters for the (BBAN) basic bank account number.

Implemented back in 1991, the IBAN structure was established to standardize bank account numbers and ease international transfers inside the European Union.

The European Committee for Banking Standards was a pioneer in developing the IBAN system and was eventually approved by the International Organization for Standardization (ISO) as ISO 13616:1997.

📖 Find out more about how IBAN numbers work and why they're important for global banking.

What is SWIFT?

SWIFT code, sometimes referred to as BIC code, is a worldwide recognized bank code implemented to detect the bank and its branch whilst international money transfer takes place.

SWIFT system is a nationwide financial messaging network that instigates international money transfers and settlements among international banks, corporations, governments, and other institutions.

The SWIFT system assigns each financial institution its unique code that has either eight characters or 11 characters.

💭Did you know? Statrys has its own SWIFT code which is STYSHKHH.

Established by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) in 1973 to provide secure electronic messaging services to its members.

The Society is an independent not-for-profit membership association based in Belgium with over 11,000 member financial institutions from more than 200 countries and regions worldwide.

Since its creation in the 1970s, the SWIFT network has grown to become one of the most renowned networks in the world in terms of international payments.

📖 Find out which payment method - SWIFT or local transfers is the best for your business.

What's the main difference between IBAN and SWIFT codes?

The differences between the two can be distinguished and split between their format of the codes and the location being used to identify specific business bank accounts.

Format of SWIFT and IBAN codes

An IBAN number consists of 32 alphanumeric characters, including a two-digit country code and a two-digit location code.

With this format, it will be sufficient to identify bank accounts, as well as the country of the recipient's bank.

On the other hand, the SWIFT code has 8 to 11 alphanumeric characters, including the number of different codes used such as the four-letter bank code, two-digit country code, location code, and an optional three-digit branch code to identify the bank branch.

💡 Explore this list of different bank codes for banks registered in Hong Kong.

Far apart from IBAN codes, SWIFT codes don't identify a specific account number.

Location

IBAN numbers are predominantly used for transfers in European countries with a few expectations in the Caribbean and the Middle East.

💭 Did you know? Nearly 80 countries are currently using the IBAN system to process IBAN payments.

In contrast, SWIFT codes are considered more of a universal transfer choice and are the default transfer method for countries outside of Europe.

International wire transfers can be also considered under SWIFT payments as well.

Example of an IBAN

Here is an example of an IBAN number format:

The above is an example of a French IBAN number format:

• Two-letter country identification code
• Two check digits
• Up to 30 characters for the Basic Bank Account Number (known as BBAN). Each country decides the BBAN format to cater to its national standard for domestic payments or telegraphic transfers.

Example of a SWIFT Code

Here's an example of SWIFT codes which are made up of 8 or 11 characters and are formatted as follows:

• AAAA - The first 4 characters represent the bank or institution code.
• BB - The next 2 characters represent the country code where the bank is located.
• CC - The next 2 characters represent the location code, which can be either a city code or a branch code.
• DDD - The final 3 characters (optional) represent the branch code of the bank.

How to find IBAN/SWIFT codes?

You can easily find the IBAN code or SWIFT code on your bank statement, both online and offline.

💡 Online or traditional banking? Understand the differences between the two.

If you don't have access to bank account statements, you can always use online IBAN or SWIFT code-identifying tools.

Here are some trustworthy tools we recommend:

• Interntional bank account number (IBAN)
• The SWIFT Codes
• Bank Codes

Wrapping Up

In summary, IBAN and swift codes play an important role when it comes to processing and facilitating international bank transfers.

While each code has a similar function, they are used in different ways IBAN is a standard format for bank account numbers that are mainly used in European Union countries while SWIFT is a global messaging network that allows international transactions and other financial institutions to communicate via the internationally recognized network.

Statrys can be an alternative option being a virtual business account provider based in Hong Kong, offering access to SWIFT payments and cross-border payments.

With Statrys, you have the ability to hold 11 currencies to make and send transfers, at cheaper rates compared to other traditional banks.

If you are a business incorporated in Hong Kong, Singapore, or the BVI, that frequently needs to make international payments, discover how Statrys can help streamline your finances.