Difference Between IBAN vs. SWIFT Code
If you ever tried to transfer money from one country to another, you might have heard about the SWIFT code or IBAN. Both of these codes provide a similar function, but differently. So, what are these codes, and why are they essential in regular and business money transfer through banks?
There are only two standardized methods to identify from which country the transaction is done. These are:
- Society for Worldwide Interbank Financial Telecommunication (SWIFT)
- International Bank Account Number (IBAN)
The significant difference between these two codes is that these codes are considered different based on what they are used to identify. A SWIFT code is also known as a bank code, and it is used to identify a specific bank during an international bank transfer. IBAN also known as a bank identifier code is used to identify the individual account during an international bank transfer.
Importance of Each Code
Both of these are very important for a smooth bank transfer. Imagine you received money from your friend, and it is named anonymous, you will be shocked and confused. Bank codes like Swift codes and IBAN codes help to remove those confusions and prevent unnecessary visits to your bank.
IBAN vs. SWIFT Code: History
To understand which code is better, let us understand a bit of the history of their existence.
History of SWIFT Code
Before SWIFT, the most trusted code for international funds transfer was Telex. Unfortunately, Talex was slow, raised some security problems, and a fake code can be formed pretty easily. So, an international system SWIFT code was introduced to cope with this problem.
Swift Code began in only 15 countries in 1973 and is now available all around the world. This was a secure method, but the only downfall was that it couldn’t tell you from whose account the money came. This started to raise concerns in Europe.
History of IBAN
Europe developed a new code called IBAN in 1997. The European Committee adopted it for Banking Standards (ECBS). Other countries realized its importance and started adopting it. Canada and the USA are the only countries that do not have an IBAN code but do accept it.
This bank identifier code wasn’t able to beat the popularity of the SWIFT code, and no, we have to deal with both of them in our daily lives.
Which Bank Code is better?
Both bank codes are essential in their own ways. Different people use both. Companies who don’t want to express their bank reveal their bank name, will go for a swift code transfer. But, if a person is sending a friend or a family member some money then, he would prefer an IBAN transfer.
And sometimes both of them are used by big companies to make a secure payment. They both have their value with respect to their features.
Conclusion
Both of these eight to eleven-digit bank codes are important for smooth international transactions. It secures your identity and your money. We hope this article will help you understand the main difference.
