IBAN has started to be adopted by European countries as a standard way of identifying bank accounts. It's majorly used for international money transfers.
If you have a business account in the UK, you might want to create a UK IBAN for your business to ease your transfers and daily financial transactions. This will allow you to send and receive payments in Euros or Sterling.
There are certain ways to create a UK IBAN for your business account. You can either go to your bank and request for one or use an online IBAN generator.
Today we'll talk in detail about what is UK IBAN, how to create a UK IBAN for your business account and how you can leverage your wamo business account to get your IBAN in the easiest and quickest way possible.
What is UK IBAN?
The full form is the International Bank Account Number and it consists of up to 34 characters. It’s used to facilitate cross-border payments and to make sure that the money reaches the right account. The IBAN in the United Kingdom is made up of 22 characters. The first four characters are the bank identifier code (BIC), which is followed by two zeros. This is followed by the basic bank account number (BBAN).
Before it was created, people had to know the bank, branch and account number of the recipient, as well as the SWIFT code. However, with IBAN in place, you just need to provide the IBAN number and the money will be transferred to that account.
The advent of IBAN has further reduced transaction errors and has helped in the standardization of bank account numbers across Europe.
It was introduced by the ECBS (European Committee for Banking Standards) and the first country to use it was Germany in the early nineties. The system was originally brought into use to make it easier for companies to send money to bank accounts in other countries. At the time, there were around 100 different formats in use across Europe and this created a lot of confusion.
With international bank account number, banks in different countries can easily process cross-border payments. This makes doing business internationally much simpler and more efficient.
Your IBAN number might look like GB82WEST12345698765432
Here's what each element of the IBAN stands for: GB - The country code for the UK. Here it means Great Britain
82 - The sort code (for example, 20-00-00), which means the bank's name
WEST - The unique identifier for the account. These are the first four letters of the bank's name and are called Bank Identifier Code. IBCs are also called swift codes, which help overseas banks to identify banks in the UK if you want to send or receive business transfers.
12345698765432 - The basic bank account number (BBAN)
Why does your business need a UK IBAN?
If you want to receive international payments from customers or suppliers, you'll need a UK IBAN. This is because IBAN is now the standard way of identifying bank accounts for cross-border payments.
It further reduces transaction errors and makes sure that the money reaches the right account. All you need is the international bank account number and you can be confident that the payment will be processed smoothly.
It's important to note that while IBAN is not mandatory in the UK, most banks now require it for international payments. This is because an IBAN number provides more information than a regular bank account number and makes it easier to process payments.
Getting an IBAN has more benefits like:
1) Safer Transactions: With IBAN in place, you no longer need to know the bank, branch and account number of the recipient. All you need is the IBAN number and the payment will be processed smoothly. This reduces transaction errors and makes sure that the money reaches the right account.
2) Standardization: The IBAN system has helped in the standardization of bank account numbers across Europe. This makes doing business internationally much simpler and more efficient.
3) Reduce Costs: The advent of IBAN has further reduced transaction errors and has helped in the standardization of bank account numbers across Europe. This makes international money transfers cheaper and easier.
4) Helps in Fraud Prevention: With IBAN in place, you no longer need to provide sensitive information like your bank account number or sort code. This reduces the chances of fraud and makes sure that your money is safe.
SWIFT/BIC vs. IBAN: What’s the difference?
While SWIFT/BIC is used to identify a particular bank, IBAN is used to identify a specific bank account.
SWIFT/BIC is required for international payments but IBAN is now the standard way of identifying bank accounts for cross-border payments.
IBAN contains all the information that is required for a successful international money transfer. This includes the country code, account number, and bank identifier code.
On the other hand, SWIFT/BIC codes are used to identify banks but they don't provide any information about the account holder or the account number.
It's important to note that you'll need both IBAN and SWIFT/BIC codes for an international money transfer. This is because the SWIFT code is used to identify the banks while IBAN is used to identify the specific bank account.
Both codes are required for a successful international money transfer.
How can you generate UK IBAN with wamo?
Once you are up and running with your business account with wamo, which just takes 10 minutes to apply, you can create UK IBAN number easily. With wamo, you can create multicurrency sub-accounts with EUR and GBP which will have EUR and GBP IBAN number for each one. This makes international payments much simpler for your business. Open account with UK IBAN with wamo now, bring your business further.