The IBAN (International Bank Account Number) code is a number assigned to a bank account and is widely used to transfer money to some countries, mainly in Europe. In Canada, banks don’t use the IBAN number, but it is important to be careful when sending money to an international recipient so that the possibility of any error in the money transfer is reduced.
Learn more about the IBAN number below.
How does the IBAN number work?
The IBAN number consists of two letters that represent a country code, two bank verification digits, and up to 35 alphanumeric characters – according to each nationality. Currently, 75 countries use this type of code. Therefore, when sending money abroad, it is essential to ask for the IBAN number of the recipient’s deposit account if the recipient is in a country that uses it.
It is worth noting that if the IBAN number is not entered or is incorrect at the time of the international money transfer, there may be charges by the bank which is receiving the money, in addition to causing the transfer to be rejected. This code is not used for withdrawals, only for payments. Therefore, it is essential to make sure that the number is correct.
Who uses the IBAN number?
At first, the IBAN number was created with the purpose of making electronic payments easier between banks that are part of the Eurozone. Over time, it expanded to the rest of the world, but still not all financial institutions adopted it—as is the case in Canada, the United States, Australia, and countries in Asia, for example.
In some banks, an alternative system called SWIFT (World Interbank Financial Telecommunication Society) is used. Canada is one of those countries that use SWIFT instead of IBAN when someone abroad wants to send money to a Canadian recipient.
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