International Bank Account Number: Difference between revisions

The International Bank Account Number (IBAN) is an internationally agreed means of identifying bank accounts across national borders with a minimal risk of propagating transcription errors. It was originally adopted by the European Committee for Banking Standards (ECBS), and later adopted as an international standard under ISO 13616:1997. The current standard is ISO 13616:2007, which indicates SWIFT as the formal registrar.

The IBAN was originally developed to facilitate payments within the European Union but the format has now been adopted by many Middle Eastern countries as well as most European countries. It consists of a four character header comprising an ISO 3166-1 alpha-2 country code, followed by two check digits that are calculated using a mod-97 technique which is prefixed to a country-specific Basic Bank Account Number (BBAN) of up to thirty alphanumeric characters.

The checksum enables the initiator of a transaction to perform a sanity check of the bank account number on their own computer prior to actually initiating a request. The BBAN, whose format is decided by each national banking community, includes the domestic bank account number, branch identifier and potentially routing information, the only restrictions being that it must be of fixed length and that only case-insensitive alphanumeric characters are used.

Before IBAN, users, especially individuals and small businesses (SMEs), used to be confused by the differing national standards for bank account identification such as bank, branch, routing codes and account number. This often led to necessary routing information being missing from payments. Furthermore routing information as specified by ISO 9362 does not contain check digits, so simple errors of transcription were not detectable and it was not possible for a sending bank to validate the routing information prior to submitting the payment. Routing errors were therefore frequent causing payments to be delayed and incurred extra costs to the sending and receiving banks and often to intermediate routing banks also.^[1]

In 1997, to overcome these difficulties, the International Organization for Standardization (ISO) published ISO 13616:1997.^[2] This proposal had a degree of flexibility which the European Committee for Banking Standards (ECBS) believed would make it unworkable and they produced a "slimmed down" version of the standard which, amongst other things, permitted only upper case letters and required that the IBAN for each country have a fixed length.^[3] ISO 13616:1997 was subseqently withdrawn and replaced by ISO 13626:2003.^[2] The standard was revised again in 2007 when it was split into two parts. ISO 13616-1:2007 "specifies the elements of an international bank account number (IBAN) used to facilitate the processing of data internationally in data interchange, in financial environments as well as within and between other industries" but "does not specify internal procedures, file organization techniques, storage media, languages, etc. to be used in its implementation".^[4] ISO 13616-2:2007 describes "the Registration Authority (RA) responsible for the registry of IBAN formats that are compliant with ISO 13616-1 [and] the procedures for registering ISO 13616-compliant IBAN formats"^[5] The official IBAN registrar under ISO 13616-2:2007 is SWIFT.^[6]

IBAN imposes a flexible but regular format sufficient for account identification and contains validation information to avoid errors of transcription. It carries all the routing information needed to get a payment from one bank to another wherever it may be; it contain all the key bank account details such as Bank Identifier Codes, branch codes (known as sort codes in the UK and Ireland) and account numbers and it contains check digits which can be validated at source according to a single standard procedure.^[7] Where used, IBANs have reduced trans-national money transfer errors to under 0.1% of total payments.

The check digits enable the sending bank (or its customer) to perform a sanity check of the routing destination and account number from a single string of data at the time of data entry.^[3] This check is guaranteed to detect any instances where a single character has been omitted, duplicated, mistyped or where two characters have been transposed. Thus routing and account number errors are virtually eliminated.^[8]

The IBAN should not contain spaces when transmitted electronically. However, when printed on paper, the IBAN is expressed in groups of four characters separated by a single space, the last group being of variable length as shown in the example below^[9]

The characters that may be used in an IBAN are the numbers '0' to '9' and the 26 upper case Latin alphabetic characters 'A' to 'Z'.^[8] This applies even in countries such as Greece, Saudi Arabia and Israel (see above) and others where these characters and/or numerals are not used in the national language.

One of the design aims of the IBAN was to enable as much validation as possible to be done at the point of data entry.^[10] In particular, the computer program that accepts an IBAN will be able to validate:

• the country code
• the number of characters in the IBAN correspond to the number specified for the country code
• the BBAN format specified for the country code
• the account number, bank code and country code combination is compatible with the check digits.

The check digits are calculated using MOD-97-10 as per ISO/IEC 7064:2002^[8] (abbreviated to mod-97 in this article) which specifies a set of check character systems capable of protecting strings against errors which occur when people copy or key data. In particular, the standard states that the following can be detected:

• "all single substitution errors (the substitution of a single character for another, for example 4234 for 1234);"
• "all or nearly all single (local) transposition errors (the transposition of two single characters, either adjacent or with one character between them, for example 12354 or 12543 for 12345);" Since the IBAN error detection uses mod 97, it will trap all such errors.
• "all or nearly all shift errors (shifts of the whole string to the left or right);" These errors will be trapped by the computer program as they will result in an incorrect format.
• "a high proportion of double substitution errors (two separate single substitution errors in the same string, for example 7234587 for 1234567);"
• "a high proportion of all other errors."

The underlying rules for IBANs is that the account-servicing financial institution should issue an IBAN, as there are a number of areas where different IBANs could be generated from the same account and branch numbers that would satisfy the generic IBAN validation rules. In particular cases where 00 is a valid check digit, 97 will not be a valid check digit, likewise if 01 is a valid check digit, 98 will not be a valid check digit, similarly with 02 and 99.

The UN CEFACT TBG5 has published a free IBAN validation service in 32 languages for all 57 countries that have adopted the IBAN standard.^[11] They have also published the Javascript source code of the verification algorithm.^[12]

A similar English language IBAN checker which is restricted to ECBS member country bank accounts is available on their website.^[13]

The basis of the IBAN validation is to convert the IBAN into a number and to perform a basic Mod-97 calculation (as described in ISO 7064) on it. If the IBAN is valid, then the remainder equals 1. Rule process of IBAN validation is:"^[7]

1. Check that the total IBAN length is correct as per the country. If not, the IBAN is invalid.
2. Move the four initial characters to the end of the string.
3. Replace each letter in the string with two digits, thereby expanding the string, where A=10, B=11, ..., Z=35.
4. Interpret the string as a decimal integer and compute the remainder of that number on division by 97.

If the remainder is 1, the checks digits test is passed and the IBAN might be valid.

Example (fictitious United Kingdom bank, sort code 12-34-56, account 98765432):

• IBAN: GB82 WEST 1234 5698 7654 32
• Rearrange: W E S T12345698765432 G B82
• Modulus: 3214282912345698765432161182 mod 97 = 1

According to the European Committee for Banking Standards (ECBS) "generation of the IBAN shall be the exclusive responsibility of the bank/branch servicing the account".^[7] The ECBS document replicates part of the ISO/IEC 7064:2003 standard as a method for generating check digits in the range 02 to 98. Check digits in the ranges 00 to 96, 01 to 97, and 03 to 99 will also provide validation of an IBAN, but the standard is silent as to whether or not these ranges may be used.

The preferred algorithm is:"^[7]

1. Check that the total IBAN length is correct as per the country. If not, the IBAN is invalid.
2. Replace the two check digits by 00 (e.g., GB00 for the UK).
3. Move the four initial characters to the end of the string.
4. Replace the letters in the string with digits, expanding the string as necessary, such that A or a=10, B or b=11 and Z or z=35. Each alphabetic character is therefore replaced by 2 digits.
5. Convert the string to an integer (i.e., ignore leading zeroes).
6. Calculate Mod-97 of the new number.
7. Subtract the remainder from 98 and, if necessary, pad with a leading 0 to make a two digit number.

It is often not practical to perform these calculations directly without using languages or packages that support arbitrary-precision arithmetic, so many programs, such as the Javascript program published by UN CEFACT TBG5 use a piece-wise approach. The code in that program^[12] validates a given IBAN as follows:

The digits ${\displaystyle d_{i}}$ of the number ${\displaystyle D}$ are extracted from the ASCII string that was passed to the program. Their relationship can be expressed mathematically by

${\displaystyle D=\sum \limits _{i=1}^{n}{d_{i}\times 10^{(i-1)}}}$,

The program evaluates ${\displaystyle \left(D\right){\bmod {k}}}$ by making use of the relationship

${\displaystyle \left(D\right){\bmod {k}}=\left({\sum \limits _{i=1}^{n}{d_{i}\times a_{i}}}\right){\bmod {k}}}$,

where the ${\displaystyle a_{i}}$ are a fixed array of integers independent of ${\displaystyle D}$ defined by

${\displaystyle a_{i}=\left({10^{(i-1)}}\right){\bmod {k}}}$.

The sequence ${\displaystyle \left\{{a_{i}\left|{i=1\ldots n}\right.}\right\}}$ is generated using the iterative relationship

${\displaystyle a_{1}=1;\quad a_{i+1}=\left({a_{i}\times 10}\right){\bmod {k}}}$.

The relationships used by the program can be proved using the modular arithmetic identities^{[citation needed]}

${\displaystyle \left({a+b}\right){\bmod {k}}\equiv \left[\,{\left({\left(a\right){\bmod {k}}}\right)+\left({\left(b\right){\bmod {k}}}\right)}\,\right]{\bmod {k}}}$

and

${\displaystyle \left({a\times b}\right){\bmod {k}}\equiv \left[\,{\left({\left(a\right){\bmod {k}}}\right)\times \left({\left(b\right){\bmod {k}}}\right)}\,\right]{\bmod {k}}}$

In practice this algorithm can be performed using 16-bit integer arithmetic even though ${\displaystyle D}$ itself might be more than 30 digits in length.^{[citation needed]}

In this example, the calculation of (3214282912345698765432161182 mod 97) using modular arithmetic is explained in detail. If the result of this calculation is one, the IBAN passes the check digit test. For clarification, the IBAN digits are colour-coded as above.

In the table below:

• Column i are the digit numbers counting from the right to left.
• Column d_i are the values of these digits.
• Column a_i are the progressive values calculated as a_i = (10 x a_i-1) mod 97, where a₁ = 1.
• Column d_i × a_i is self-explanatory.
• Columns Definition of a_i and Calculation of a_i detail how the values of a_i are calculated.

The values a_i are independent of the IBAN being checked, i.e., they form a constant array for all checks digit tests on IBANs with a certain length. The value 27 is highlighted to show the propagation of the values of a_i from one row to the next.

The final two rows conclude the computation, by checking that Mod-97 of the sum of the values in column d_i × a_i equals one. Note that 4560 is the largest number appearing in this algorithm, which can easily be accommodated by a 16-bit computer.

International bank money transfers use either an IBAN or the current ISO 9362 Bank Identifier Code system (BIC or SWIFT code) in conjunction with the BBAN.

The banks of most countries in Europe use an IBAN identifier for their accounts as well as the nationally recognised identifiers - this being mandatory within the European Economic Area.^[14] In addition Costa Rica, Dominican Republic, Israel, Kazakhstan, Kuwait, Lebanon, Mauritania, Mauritius, Pakistan, Saudi Arabia, Tunisia, United Arab Emirates and the British Virgin Islands also use the IBAN format account identifiers.^[9]

Banks in the British dependencies (except Gibraltar and the Crown Dependencies) do not use the IBAN identifier, but this may be due to internal banking regulatory issues. Banks in the Dutch West Indies also do not use the IBAN identifier. Some banks outside Europe may not recognize IBAN, though as time passes this is expected to diminish. Non-European banks typically accept IBANs as bank account numbers for accounts in Europe, although they might not treat IBANs differently to the way they treat other foreign bank account numbers. In particular, they might choose not to check that the IBAN is valid prior to sending the transfer.^{[original research?]}

Banks in the United States do not use IBAN identifier account numbers. Any adoption of the IBAN standard by U.S. banks would likely be initiated by ANSI ASC X9, the U.S. financial services standards development organization, but to date it has not done so. Hence payments to U.S. bank accounts from outside the U.S. are prone to errors of routing.

Canadian financial institutions have not adopted IBAN and use bank transit numbers issued by the Canadian Payments Association for domestic transfers and SWIFT for international transfers. There is no formal governmental or private sector regulatory requirement in Canada for the major banks to use IBAN.

Financial institutions in Australia and New Zealand do not use IBAN, and use Bank State Branch codes for domestic transfers and SWIFT for international transfers.

The IBAN designation scheme was chosen as the foundation for electronic straight-through processing in the European Economic Area. The European Parliament mandated that a bank charge needs to be the same amount for domestic credit transfers as for cross-border credit transfers regulated in decision 2560/2001 (updated in 924/2009).^[14] This regulation took effect as of 2003. Only payments in Euro up to €12,500 to a bank account designated by its IBAN were covered by the regulation.

The Euro Payments regulation has been the foundation for the decision to create a Single Euro Payments Area (SEPA). The European Central Bank has created the TARGET2 interbank network that unifies the technical infrastructure of the 26 central banks of the European Union (although Sweden and the UK have opted-out). SEPA is a self-regulatory initiative by the banking sector of Europe as represented in the European Payments Council (EPC). The European Union made the scheme mandatory through the Payment Services Directive published in 2007. Since January 2008 all countries must support SEPA credit transfer and SEPA direct debit must be supported since November 2009. The regulation on SEPA payments increases the charge cap (same price for domestic payments as for cross-border payments) to €50,000.

With a further decision of the European Parliament the IBAN scheme for bank accounts shall fully replace the domestic numbering schemes up to 31 December 2012.^[15] On 16 December 2010 the European Commission published proposed regulations that will make IBAN support mandatory for domestic credit transfer by 2013 and for domestic direct debit by 2014 (with a 12 and 24 months transition period respectively).^[16] Some countries have already replaced their traditional bank account scheme by IBAN, this includes Switzerland which introduced the IBAN for national credit transfer on 1 January 2006 and the support for the old bank account numbers is not required from 1 January 2010.^[17]

Based on the memorandum from December 20, 2011^[18] the EU parliament resolved the mandatory dates for the adoption of the IBAN on February 14, 2012.^[19] Until February 1, 2014 all national systems for credit transfer and direct debit must be abolished to be replaced by a IBAN-based system.^[19] The decision also mandates that the usage of the BIC along with the IBAN must be dropped - no later than February 1, 2014 national transactions must not require the BIC and no later than February 1, 2016 all cross-border SEPA transactions must not require the BIC (Article 5 Section 7).^[19] The IBAN will be sufficient to identify an account for home and foreign financial transactions in SEPA countries.

This table summarises the IBAN formats of various countries:^[9]

• The kk after the two character ISO country code represents the check digits calculated from the rest of the IBAN characters. If it is a constant for the country concerned, this will be stated in the Comments column. This happens where the BBAN has its own check digits that use the same algorithm as the IBAN check digits.
• The BBAN format column shows the format of the BBAN part of an IBAN in terms of upper case alpha characters (A-Z) denoted by "a", numeric characters (0-9) denoted by "n" and mixed case alphanumeric characters (a-z, A-Z, 0-9) denoted by "c". For example, the Bulgarian BBAN (4a,6n,8c) consists of 4 alpha characters, followed by 6 numeric characters, then by 8 mixed-case alpha-numeric characters.
• Descriptions in the Comments field have been standardised with country specific names in brackets. The format of the various fields can be deduced from the BBAN field.

• Bank card number
• Bank regulation

• Official ISO 13616 Registry
• ISO 13616-1:2007
• IBAN page (not owned by the European Committee for Banking Standards)
• State Bank of Pakistan(State Bank of Pakistan)
• Handbook of the Standardization and Application of BBAN and IBAN in Cyprus - manual by the central bank of Cyprus