Whether to pay an employee in London or make payments to your suppliers across the pond, transferring money internationally can be challenging and expensive if you don’t know what you’re doing. The best way to avoid problems is to choose a bank that supports the right transfer codes, which will save you both time and money on your international payments. The three main types of codes are IBAN, SWIFT, and BIC, so let’s take a look at what they are and how they differ from one another.
1) International Bank Account Number (IBAN)
The International Bank Account Number (IBAN) is an internationally standardized bank account numbering system. An IBAN consists of up to 34 alphanumeric characters arranged in a format specified by ISO 13616. People may use it to identify an individual bank account or serve as a routing code for international wire transfers within a country’s banking system.
2) Society for Worldwide Interbank Financial Telecommunication (SWIFT)
SWIFT (also known as ISO 9362 or ISO TE-936) is a financial transaction messaging standard used for exchanging electronic payment orders between banks. It was originally developed in 1973 by a consortium of 13 international banks to facilitate communications between their computer systems. Now it is managed by SWIFT (the Society for Worldwide Interbank Financial Telecommunication). More than 11000 banks adopted it in over 200 countries, and it transmits more than 15 million messages per day.
3) Bank Identifier Code (BIC)
A BIC is a Bank Identifier Code used to uniquely identify banks from all over the world. The code consists of eight (8) or eleven (11) characters, with letters and numbers. They are mainly used in international wire transfers but are also part of various communication standards to transmit bank-related information. As an example, SWIFT uses these codes when transferring money between accounts.
Which is Better?
The answer to that depends on what you’re looking for. If you are a bank and need to send money overseas (BIC/SWIFT), you can use SWIFT codes. If you transfer money from one place in another country (IBAN), then IBAN codes would be better. They work quite well with one another, so many banks like Western Union use both of them. Whatever code you choose, make sure your local regulator authorizes it. This will save you time and trouble further down the line.
To transfer money from one bank to another, you’ll need an IBAN code. SWIFT codes are similar to IBAN codes, but they apply to wire transfers. BIC codes help financial institutions identify banks around the world by their acronyms. So if you want to open a foreign bank account, it is recommended that you look up what BIC code applies to your new banking institution.
Learning more about these three types of codes will give you a better idea of how and where you can transfer your money. There are over 70,000 financial institutions in 200 countries all around the world. Make sure you know how each system works before using it.