What’s the Difference Between SWIFT, BIC and IBAN
Our helpful guide helps you to easily understand the many differences and relationships between SWIFT, BIC, and IBAN numbers in international transactions.
The banking industry currently uses two types of codes to route payments: SWIFT and BIC codes and IBAN numbers.
There are several differences between these types of code, but each piece of data carries out a vital role in the handling of international and cross-border transactions.
While SWIFT and BIC codes are used to route messages between banks and financial institutions, IBAN numbers are used to direct transactions to a specific bank account.
Together, these codes ensure that payments reach their proper destination. Here’s an IBAN Vs. SWIFT Vs. BIC comparison and how these standards make international banking possible in the modern financial era.
What Is a SWIFT Code? What Is the Difference between SWIFT and IBAN?
A SWIFT code is a short string that routes bank messages through the Society for Worldwide Interbank Financial Telecommunication (or SWIFT) network.
Each SWIFT code can contain 11 to 18 characters, including letters and numbers, and is formatted according to the ISO 9362 standard.
SWIFT codes identify a particular bank and are formatted as shown below. This example shows a SWIFT code for a bank branch that is part of HSBC:
HBUKGB4173S
- HBUK indicates the name of the bank (HSBC U.K.)
- GB specifies the bank’s country (the U.K.)
- 41 specifies the location of the bank’s main branch
- 73S specifies a particular branch (23 Market Street, Brighouse)
SWIFT codes do not direct transactions to an individual bank account. Instead, they allow banks to send messages to one another. As such, SWIFT codes are usually used in conjunction with other codes such as IBAN numbers.
SWIFT codes are used around the world. The system has been adopted by over 11,000 banks and financial institutions in over 200 countries, making it the world’s largest international bank messaging network. If you make an international payment, you or your bank will almost certainly use SWIFT codes at some point.
What Is a BIC Code? What Is the Difference Between BIC and IBAN?
“BIC” stands for Bank Identifier Code or Business Identifier Code.
If you're wondering the difference between BIC, SWIFT, and IBAN, BIC codes are exactly the same as SWIFT codes. The two terms are synonymous, and any given code will contain the same data regardless of its name.
The term “BIC” also shows that the standard can be applied outside of banking. Businesses can register for a BIC number without connecting to the SWIFT network, and companies that are not in the banking industry can use the standard as well.
As such, the term “BIC” is sometimes preferred due to the fact that it covers a wider range of use cases. Still, most banks will understand and use the terms “SWIFT code” and “BIC code” interchangeably when referring to the standard.
What Is an IBAN Number?
An IBAN number is an international bank account number.
These numbers may contain up to 34 characters, including letters and numbers, and must adhere to the ISO 13616 standard.
IBAN numbers include specific bank information and account information. A fictional IBAN number from the U.K. might look like this:
GB82 WEST 1234 5698 7654 32
- GB represents a country (the U.K.)
- 82 are check digits used to verify the rest of the string
- The remaining characters contain a BBAN (basic bank account number); the length and format of this section vary by country
The remaining characters contain a BBAN (basic bank account number); the length and format of this section vary by country.
Whereas SWIFT numbers are used to direct messages between banks, IBAN numbers are used to direct transactions to banks and specific bank accounts.
IBAN numbers are not used nearly as widely as SWIFT codes. They are usually used in Europe and the Middle East and are rarely used in the Americas and Asia. If you are sending money to a country that does not use IBAN, you may need to use a SWIFT code with another account numbering standard similar to IBAN.
Though it is possible in some cases to route a bank transaction with just one piece of data, IBAN numbers and SWIFT codes are often used together. This ensures that banks have enough routing information and can cross-reference that data if needed.
How Does International Banking Work?
International banks work together closely to facilitate cross-border transactions.
Banks must communicate with customers and clients as well as other banks.
In order to comply with regulations, banks usually need to collect data on large monetary transactions and the customers who send those transaction.
In some countries, banks may have limited staff or branch locations and may work with different systems. Transaction messages and requests may need to go through multiple countries before reaching their destination, meaning transaction times may be compounded depending on the strength of each country’s banking system.
Though SWIFT and IBAN codes standardize international banking, cross-border transaction can nevertheless take multiple days to complete—and this depends on which countries are involved in a transaction.
Are There Fees Associated with International Banking?
International banking usually involves various fees.
Precise fees vary between banks. If you send a wire transfer over the SWIFT banking network, you may be charged a flat fee between $10 to $50 regardless of the amount in your transaction. This makes SWIFT unsuitable for very small payments.
If you use a different banking network, you may be charged a fee proportionate to the size of your transaction. In this case, you might pay a fee between 1% and 3.5% of the total transaction amount. If your funds are to be converted to another currency, you may pay a conversion fee as part of that fee or as an additional charge.
On top of these basic fees, banks themselves often need to pay maintenance and service fees to SWIFT and other international banking networks. Those fees may be passed on to end users in another way alongside other charges.
How to Source IBAN and SWIFT Codes
Customers can find their IBAN (international bank account number) on their bank statement, or they can access it through their financial institution’s online banking or an IBAN calculator tool. Customer service at the bank will help to provide the number if you are still in doubt.
SWIFT, BIC, and IBAN codes are also easily available, and many banks provide a SWIFT code on their website. Again, the bank’s customer services will help to source the right information.
How to Use IBAN and SWIFT
The information required for using SWIFT, BIC, and IBAN will depend on whether you are sending or receiving funds internationally.
Sending Funds
Before starting a transfer, users should double-check the SWIFT, BIC, and IBAN codes. Providing an incorrect number will lead to the transfer being rejected by your financial institution, which will add another set of fees.
Receiving Funds
When receiving funds internationally, the sender must have your IBAN number. It is safe to share your IBAN code as it is not possible to access your account with it.
What Are the Main Uses of SWIFT, BIC, and IBAN Codes?
IBAN numbers are solely used for bank transfers. SWIFT, which has no upward limit on transfers, is used by a variety of large institutions. These can include:
Asset management firms – Receiving and returning investments from/to overseas clients.
Brokerages/Exchanges – For payments related to client accounts, or to send money to international branches.
Corporate Businesses – With companies becoming more multinational in their presence, a variety of payments will be sent, such as payments for goods/services, payments to international partners or global offices, and payments for transactions such as property or business acquisitions.
SWIFT transactions can carry higher fees which is why they are not used solely for bank transfers.
What Are Virtual IBANs?
IBAN numbers are solely used for bank transfers. SWIFT, which has no upward limit on transfers, is used by a variety of large institutions. These can include:
A virtual IBAN is a virtual account number issued by a banking or payments provider, which lets you send and receive international transfers.
The virtual IBAN looks exactly the same as a regular IBAN. However, a regular IBAN will be tied to a bank account at 1:1, according to deposits. With a virtual IBAN, you can have multiple unique vIBANs with different balances held in the same pooled account. The virtual IBAN can therefore work as a sub-account of a master account, allowing payments to be easily routed and reconciled.
What Are the Benefits of Virtual IBANs?
A vIBAN can be useful when sending and receiving a range of payments with different people. With one IBAN, the sender will need to add further information for reference. If they forget to add reference information, then you will need to track down the originator and reconcile the payments. However, if each payee has a separate vIBAN, the payee won’t have to add further reference information, and it will be easier to keep track of incoming payments.
For sending payments, the virtual IBAN looks identical to a conventional IBAN as a series of digits that will identify the beneficiary account. Virtual IBANs are easy to create, while bricks and mortar banks only offer the IBAN if it is tied to a single account.
How Payset Can Help
At Payset, customers can take advantage of various international payment methods, including local IBAN bank accounts and SWIFT transfer requests.
Tailored Fees
As a Payset customer, fees are adjusted to your circumstances. Outgoing SEPA transfer fees start at 0.4%, and outgoing SWIFT transfer fees start at 0.45%. Plus, you can send money to other Payset accounts at no cost and receive money for free.
Other Transfer Options
In addition to SWIFT, BIC, and IBAN, Payset also provides access to other means of transaction including SEPA, ACH, Faster Payments, and CHAPS. These services are ideal for users in Europe and elsewhere.
International Support
By joining Payset, you’ll have access to 38 different foreign currencies. You’ll also have the ability to send funds to and from 180 countries while relying on a company that fully complies with U.K. regulations. Payset is a truly international payment solution.
Frequently asked questions
What is a multi-currency account/virtual IBAN?
A Payset multi-currency account allows you to receive money in 34 different currencies and send money in up to 38 currencies, all within the same account.
You can deposit and withdraw funds, convert currencies at competitive exchange rates, and hold your chosen currencies to capitalize on market movements.
A Payset multi-currency account allows startups and business owners to receive payments from clients virtually anywhere in the world and pay suppliers, staff, and contractors quickly and affordably in their chosen currency.
- Funds can be deposited and withdrawn from the account for a small fee.
- Account holders can send and receive money with other Payset users for free.
- Depending on your region, you can use various payment networks from your Payset account, including SWIFT, SEPA, ACH, Fedwire, Faster Payments, BACS, and CHAPS.
- Once you register an account, you will be provided with a Virtual IBAN (International Bank Account Number), which makes all of these transfers easy.
- We provide you with local payments and collections. For example, transactions in USD, EUR, CAD, and GBP are processed through the local payment networks, which is far cheaper and takes minutes as opposed to days
Are there limits on the amount of money I can send and receive?
No, there are no transaction limits on Payset multi-currency accounts.
However, higher-volume transactions may require additional anti-fraud verification. If you plan to make a large transaction, contact us in advance to avoid verification delays.
How is Payset regulated?
Payset is regulated as an authorized Electronic Money Institution by the UK Financial Conduct Authority. Our activities are also regulated by the Payment Services Regulation 2017 and the Electronic Money Regulation 2011 (SI 2011/99).
How do I add money to my account?
How do I send money from my account?
Once you have opened your verified IBAN account and added money to a balance, transferring funds is simple.
Simply log in into your account and add a beneficiary, then simply “make a transfer” in your preferred currency to that beneficiary.
Types of Multi-Currency Accounts
Information contained in this publication is provided for general education and information purposes only and should not be construed as legal, tax, investment or other professional advice or recommendation, or an offer of, or solicitation for, any transactions or any other actions (or refraining therefrom); This material has been prepared without taking into account any particular recipient’s financial objectives or situation. We make no warranty, guarantee or representation, whether express or implied, as to the completeness or accuracy of the information contained herein or fitness thereof for a particular purpose; Use of images and symbols is made for illustrative purposes only and does not constitute a recommendation or advice to take or refraining from any action; Use of brand logos does not necessarily imply a contractual relationship between us and the entities owning the logos, nor does it represent an endorsement of any such entity by Pay Set Limited, or vice versa; Market information is made available to you only as a service, and we do not endorse or approve it; Any reference to past performance, predicted returns, or likelihood performance scenarios may not reflect actual future performance and certainly do not guarantee future outcomes.
