IBAN vs. SWIFT code: Understanding how they're different

IBAN and SWIFT codes are essential for international money transfers, ensuring funds are routed accurately and securely. An IBAN identifies a specific bank account, while a SWIFT code identifies the financial institution. Without these codes, payments can be delayed, returned, or misdirected.

Let's look at the differences between IBAN and SWIFT codes, how they work together, and practical tips for international banking.

What is an IBAN?

An international bank account number (IBAN) is a standardized numbering system that uniquely identifies individual bank accounts for cross-border transactions. It ensures payments reach the correct account by providing a consistent format, which reduces errors and speeds up processing times.

Each IBAN follows a structured format:

• Two-letter country code: For example, DE for Germany
• Two-digit checksum: For verifying the account number's accuracy
• Basic bank account number: Includes the bank identifier and the specific account number

This standardization helps eliminate confusion between different national account numbering systems and reduces transaction errors.

IBANs are mainly used in Europe, the Middle East, and parts of the Caribbean. The European Union, Switzerland, and the United Kingdom require IBANs for international transfers. However, the United States, Canada, Australia, and most Asian countries don't use the IBAN system. Instead, they rely on their own domestic account numbering formats alongside SWIFT codes.

What is a SWIFT code?

A SWIFT code, also known as a BIC (bank identifier code), is a unique identification code assigned to financial institutions worldwide. It serves as a global address for banks during international transactions, regardless of language or location.

SWIFT stands for Society for Worldwide Interbank Financial Telecommunication, the organization that developed and maintains this global network. SWIFT codes identify the specific bank involved in an international transaction, ensuring money is routed to the correct institution before reaching the individual account.

A standard SWIFT code contains 8-11 characters, broken down as follows:

• First four characters: Bank code, for example, CHAS for JPMorgan Chase
• Next two characters: Country code, for example, US for United States
• Following two characters: Location code, typically a city or district
• Optional last three characters: Branch code, specifies a particular branch

SWIFT codes are more universally adopted than IBANs. They're used in virtually every country with a modern banking system. Even countries that don't use IBAN, such as the United States, China, and Japan, rely on SWIFT codes for international wire transfers. This makes SWIFT the most globally recognized standard for cross-border banking communications.

Key differences between IBAN and SWIFT codes

While IBAN and SWIFT codes both facilitate B2B international payments, they serve distinct purposes in the global banking system. The main difference between these codes is what they identify:

• IBAN: Identifies a specific customer's bank account
• SWIFT: Identifies the financial institution itself

SWIFT directs a payment to the right bank, while IBAN ensures it reaches the correct account within that bank.

IBANs include details like the country, specific bank, and individual account number, focusing on the destination of funds at the account level.

SWIFT codes contain information about the bank name, country, location, and sometimes branch—but never account details. This is why most international transfers require both codes.

Here are the main differences between IBANs and SWIFT codes summarized:

Regional adoption varies. Europe has fully embraced IBAN, making it mandatory for all SEPA transactions. The Middle East and North Africa have also widely adopted IBAN. However, North America, most of Asia, and Australia primarily use SWIFT without IBAN, while Latin America shows mixed adoption—some countries use IBAN, others rely solely on SWIFT.

SWIFT isn't limited to traditional banks. Brokerage firms, payment processors, and even cryptocurrency exchanges may have SWIFT codes to send international transfers. This broader coverage makes SWIFT versatile for different types of financial transactions beyond standard bank-to-bank transfers.

These complementary codes work together to ensure accurate international transfers. SWIFT gets your money to the right bank, while IBAN directs it to the specific account holder.

How IBAN and SWIFT codes are used in international transactions

IBAN and SWIFT codes work together to create a complete addressing system for international money transfers. Here's how the process typically works:

1. When you initiate a transfer, your bank uses the SWIFT code to identify and communicate with the recipient's bank through the SWIFT network
2. Once the banks are connected, the IBAN ensures the funds are credited to the specific account at the destination bank

For example, if you're sending money from the United States to Germany:

1. You provide your bank with the recipient's IBAN and the German bank's SWIFT code
2. Your US bank uses the SWIFT code to establish a secure connection with the German bank
3. If the banks don't have a direct relationship, a correspondent bank acts as an intermediary, using SWIFT codes at each step
4. Finally, the German bank uses the IBAN to credit the specific account with your transferred funds

Requirements can vary by country. Within the European Union, an IBAN is often enough for transfers between SEPA countries. For transfers to or from non-IBAN countries, you'll need both the recipient's account number and the bank's SWIFT code. Some banks may ask for extra details for certain countries with specialized banking systems or regulatory requirements.

IBAN and SWIFT code structures

Both IBAN and SWIFT codes follow specific formats that encode essential banking information. Breaking down their structures reveals how each code type organizes data for international transactions.

Let's take a look at potential IBAN code structures:

Spanish IBAN: ES45 2100 0813 6101 2345 6789

• Country code: ES (Spain)
• Checksum: 45 (validation digits)
• Bank identifier: 21000813
• Account number: 610123456789

SWIFT codes have a different structure:

InventaBank, Canada: IVBKCA6TVAN

• Bank code: IVBK (InventaBank)
• Country code: CA (Canada)
• Location code: 6T (Toronto)
• Branch code: VAN (Vancouver branch)

IBAN length varies by country. German IBANs have 22 characters, while those from Malta can reach 31. SWIFT codes are more consistent—8 characters for main branches, 11 when specifying smaller branches. In some countries, like Spain, the branch code is part of the IBAN, while others keep this information separate.

These structured formats ensure consistent identification across global banking networks. Each code type packs vital information into standardized patterns, making international payments reliable regardless of which countries are involved.

IBAN and SWIFT code costs

When you make international transfers using IBAN and SWIFT codes, you'll typically encounter several types of fees:

• Outgoing wire fee: Charged by your bank to initiate the transfer
• Incoming wire fee: Charged by the receiving bank for processing the payment
• Intermediary/correspondent bank fees: Deducted as your money passes through their systems

Typical costs can range from $0–$50 for sending transfers and $0–$30 for receiving, depending on your bank and country. Exchange rate markups are usually 1–4% above the mid-market rate, which can be a hidden cost.

Intermediary bank charges may add another $15–$30 per transaction, sometimes more, and sometimes without clear disclosure. Larger transfer amounts may incur higher fees, but premium customers might receive better rates.

Currency pairs with lower trading volumes often face higher exchange rate markups, and transfers to certain regions, especially developing economies, may involve extra charges due to compliance requirements. Banks with established correspondent relationships usually offer more competitive rates than those needing multiple intermediaries.

International transfer costs vary significantly between providers and regions. Compare fees across multiple banks and consider specialized money transfer services, which often offer better exchange rates and lower charges.

How to find your IBAN and SWIFT codes

Finding your IBAN is straightforward:

1. Log into your online banking portal and go to the account details section. Most banks display the IBAN prominently there.
2. Check your physical bank statements. IBANs are usually printed near your account number.
3. If you still can't find it, look in the account settings or international payments section of your banking app. You can also call your bank for the information.

To find a SWIFT code:

1. Visit your bank's official website and look for sections labeled "International Transfers," "SWIFT/BIC," "Wire Transfers", or similar
2. Many banks offer SWIFT code lookup tools on their sites
3. For extra verification, use the SWIFT website's official BIC search tool or contact your bank's customer service
4. If your bank has multiple branches, double-check that you have the correct branch code. Using the wrong one can delay your transfer.

Before sending any international transaction, double-check all codes with both the sending and receiving parties. Confirm details through secure channels like official bank websites or authenticated banking apps. Avoid relying solely on email.

You may consider sending a small test transfer before moving large sums, especially with a new recipient. This can help catch errors before they impact larger transactions.

Why are IBAN and SWIFT codes important?

IBAN and SWIFT codes provide a standardized system for global banking that works across borders, languages, and local practices. By using a universal format for account identification, these codes help reduce entry errors that can disrupt international transfers.

The structured format allows for automated validation checks, catching mistakes before money is sent and preventing misdirected payments.

The benefits compared to previous systems are significant. Before standardization, international transfers required lengthy manual processing with high error rates. IBAN and SWIFT systems have reduced payment returns and cut processing times from days to hours in many cases. The standardized formats also lower costs by reducing the need for manual processing.

These codes are especially important if you run a business engaged in global commerce:

• Importing or exporting goods: You'll use these codes daily to pay suppliers and receive customer payments across borders
• Managing international payroll: Accurate IBAN and SWIFT information ensures employees in multiple countries are paid on time
• Running a global e-commerce platform: These codes send marketplace payouts to sellers worldwide

For these industries, even minor disruptions in the IBAN/SWIFT system could create significant operational challenges. With reliable IBAN and SWIFT processes in place, businesses can focus on growth opportunities rather than worrying about payment complications that could strain international relationships.

IBAN and SWIFT code considerations and limitations

Despite their widespread adoption, IBAN and SWIFT systems do have limitations. Major economies like the United States, Canada, and Australia haven't implemented IBAN, which can create compatibility issues for transfers to or from these countries.

Some smaller banks in developing regions may not be SWIFT members, requiring alternative transfer methods. And when banks merge or change names but keep their original SWIFT codes, it can lead to inconsistencies in the system.

In certain scenarios, you may need extra steps beyond standard IBAN and SWIFT procedures. One-off transfers to unfamiliar destinations may require pre-registration of recipient details or additional verification. Transactions involving less common currencies might need conversion through an intermediary currency like USD or EUR, adding complexity and cost.

Transfers to regions with strict capital controls, such as some parts of Africa or Asia, may require supplementary documentation explaining the payment's purpose. In these cases, it's best to work directly with your bank's international department to navigate any additional requirements.

Send international business payments with Ramp

International payments are a core part of running a global business. Whether you're paying suppliers, contractors, or team members across borders, you need a system that's fast, reliable, and built to handle complexity. The right setup can prevent costly delays, protect relationships, and keep your operations running smoothly.

Ramp Bill Pay supports multiple payment methods—so you don’t have to rely on a one-size-fits-all solution. Move money the way that works best for each situation:

• International wire transfers: Ramp supports payments to vendors abroad in U.S. dollars or payments to international vendors in their local currency
• Domestic wire transfers: Send large, time-sensitive payments the same day through the Fedwire network
• ACH (direct deposit): Schedule regular or same-day ACH payments for payroll, vendor bills, or other recurring expenses
• Ramp cards: Pay vendors by Ramp card and earn cashback with vendors that accept Visa
• Check payments: For US-based vendors who still prefer checks, Ramp can issue and mail checks on your behalf

With Ramp, you control how and when payments go out—without sacrificing speed, accuracy, or visibility. Get started with Ramp.