Swift, BIC and IBAN codes: what they are and why we need them?

Probably on some occasions when you try to execute a financial transaction, you have been asked for a code that you were not sure what it is.

Well, it is not a scam nor do they try to empty your account. Today we share with you what SWIFT, BIC, and IBAN codes are and why they are important.

In all international bank transfers, it is always necessary to provide a series of data that are basic for the transaction to be accomplished. Some of these data are usually the full name and account number. In addition to them, they also usually request codes that may vary depending on the countries from and to where the transfer is made.

Swift code

SWIFT is the acronym for Society for Worldwide Interbank Financial Telecommunication. This company is responsible for managing communications between banks around the world, managing particular codes for each entity and area; hence, each bank receives an identity code, which is called the SWIFT code. In this sense, SWIFT constitutes a unique alphanumeric code that identifies the receiving bank when an international transfer is made.

This code is made up of 8 and up to 11 digits, formalized by the International Organization for Standardization (ISO). Its structure encodes the basic information necessary to complete international transfers into 4 perfectly identifiable groups.

The SWIFT messaging system enables the sharing of financial data between banks, such as details of money transfers, account statements, and debit and credit amounts. This code was created to increase security in international financial transactions. Also, have the advantage of reducing waiting times, additional costs in commissions to be paid, and even errors.

BIC code

BIC is the acronym for Bank Identifier Code. The BIC code and the SWIFT are considered the same. Same information encoding, but a different name. If a bank belongs to SWIFT, then it has a BIC. If it did not belong, it would still have a BIC, that is an identification code. Using one name or the other is already a particular issue for each entity, but in essence, whether SWIFT or BIC is talking about the same code.

IBAN code

IBAN is the acronym for International Bank Account Number. It constitutes the identification code of current bank accounts when a transfer is made within the Single Euro Payment Area (SEPA). It is regulated by the European Committee for Banking Standardization.

The IBAN code is essential to carry out any banking operation between the countries that compose the SEPA. This project emerged in 2014 to achieve economic and monetary integration and to establish a single market for payment services, making them in euros, using a single bank account and a specific set of payment instruments. Currently, it covers the 27 member states of the European Union and also includes Liechtenstein, Monaco, Norway, Andorra, Vatican City, San Marino, Iceland, Switzerland, and the United Kingdom.

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