IBAN (International Bank Account Number) is a standardised account identifier, defined by ISO 13616, that lets a payment reach a specific account across borders without the sender knowing each country's domestic format. It has up to 34 characters: a two-letter country code, two check digits and a nationally defined Basic Bank Account Number. The check digits catch most typing errors through a modulo 97 test, but do not prove the account exists or belongs to the payee. IBANs are mandatory for SEPA euro payments, where the bank is derived from the IBAN, and since 9 October 2025 providers must check payee names against them. EMIs often issue virtual IBANs through partner banks, which affects how portable their customer base is.
What is the IBAN number format
An IBAN has up to 34 alphanumeric characters in three parts: a two-letter country code, two check digits, and the Basic Bank Account Number (BBAN), whose length and layout each country fixes. German and UK IBANs are 22 characters; Norway's are 15. A German IBAN such as DE89 3704 0044 0532 0130 00 contains the country code DE, check digits 89, an eight-digit bank code and a ten-digit account number.
How do IBAN check digits work
The check digits catch most typing errors before a payment is sent. To validate, move the first four characters to the end, convert each letter to two digits (A=10 through Z=35), and divide the resulting number by 97. A valid IBAN leaves a remainder of 1. A single wrong digit or two swapped adjacent digits will almost always fail this test, which is why banking apps can reject a mistyped IBAN instantly. The check proves the IBAN is well formed, not that the account exists or belongs to the intended payee.
IBAN vs SWIFT code
An IBAN identifies the account; a BIC/SWIFT code identifies the bank. For SEPA credit transfers the IBAN alone is enough, because the bank can be derived from it. For international SWIFT payments to many countries, both are needed.
Verification of payee
Since 9 October 2025, under the EU Instant Payments Regulation, payment service providers must offer a verification-of-payee check before a customer authorises a SEPA credit transfer. The check compares the IBAN with the payee name (or for businesses, an identifier such as a VAT number or LEI) and returns match, close match or no match. The payer still decides whether to proceed. For a firm issuing IBANs, this means account holder names in its records must be accurate enough to return a match.
IBANs at EMIs and payment institutions
E-money and payment institutions issue IBANs through their own access to payment schemes or through a partner bank, often as virtual IBANs that route incoming funds to individual customer accounts. A business receiving €3 million a month across 2,000 payers can give each payer its own virtual IBAN and reconcile every incoming transfer automatically.
For a buyer of an EMI, whether IBANs are issued under the firm's own country code and BIC or rented from a partner bank determines how portable the customer base is if that bank relationship ends.