Thursday, 12 January 2006

IBAN, BIC, SWIFT and all that malarkey

I went back to the bank yesterday to ask for the details I need so that I can invoice my customer in the US and they can pay me. What I need is simple: I need the relevant codes to enable them to send an international payment to my account. I had gone on Tuesday already but the answer I had got at the counter was not satisfying so I decided to ask a financial adviser. As I suspected, the actual answer is quite different.

In the UK, an account is given a 6-digit sort code and an 8-digit account number. The sort code identifies the exact branch where your account is held. The account number itself identifies the exact account in that branch. Those two pieces of information are all you need to transfer money from another account held in the UK. However, if you want to transfer money to your UK account from a foreign account, you need more than that and it can take three forms:

  • IBAN, International Bank Account Number is an alphanumeric code that identifies the banking institution, country, branch and account. It has a standard format and is widely used in the European Union. In practice, IBAN for UK accounts include the sort code and account number but add more information to make it recognisable internationally.
  • BIC, Bank Identifier Code, is an alphanumeric code that identifies the exact branch where your account is held, like the UK sort code, but is recognised internationally. To fully identify your account, you need to provide the local account number as well, like the 8 digit UK account number.
  • SWIFT, Society for Worldwide Interbank Financial Telecommunication, is the organisation through which most international transfers are executed and it looks like they have their own codes to uniquely identify the branch where your account is held. Because SWIFT is a widely used international body, their codes are widely used as well. Like BIC, you need to provide your account number as well to uniquely identify the account.

I now have all those different bits of information for my business bank account and have included them on my invoice template. So no customer of mine should have any problem paying me. The first invoice is in the post.

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