IBAN vs. SWIFT code: Key differences and when to use each

If you’ve ever tried to send money abroad and been asked for both an IBAN and a SWIFT code, you’ve seen how confusing international banking can get. These 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 them, payments can be delayed, returned, or misdirected.

IBAN and SWIFT codes work together to make cross-border transfers faster, safer, and more reliable. Understanding the difference and when to use each helps you avoid costly mistakes when paying suppliers, employees, or partners overseas.

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 that reduces errors and speeds up processing times.

Each IBAN follows a structured format of up to 34 alphanumeric characters that includes:

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

For example, a German IBAN might look like DE89 3704 0044 0532 0130 00, where DE identifies the country, 89 is the checksum, 37040044 represents the bank, and 0532013000 is the individual account number. This standardization helps eliminate confusion between different national account numbering systems and reduces transaction errors.

How IBANs work

Banks use the IBAN’s check digits to validate account details before processing a transfer. This automated verification catches typing errors early and helps ensure funds are sent to the correct destination. Because of this, IBANs significantly reduce failed transactions and processing delays in international banking.

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.

When you need an IBAN

You typically need an IBAN when:

• Sending money to Europe or other IBAN-using countries
• Receiving international payments from businesses or individuals in IBAN regions
• Setting up recurring international payments or vendor transfers that require account-level identification

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 and ensures payments reach the right institution before being credited to the recipient’s account.

SWIFT stands for Society for Worldwide Interbank Financial Telecommunication, the organization that developed and maintains the global network used by more than 11,000 financial institutions. Each SWIFT code identifies the specific bank involved in an international transaction before the funds reach the recipient’s account.

SWIFT codes are used in virtually every country with a modern banking system. Even countries that don’t use IBANs rely on SWIFT for international wire transfers. A standard SWIFT code contains 8–11 characters, broken down as follows:

How SWIFT codes work

When you send or receive money internationally, your bank communicates with the recipient’s bank through the SWIFT network. Rather than transferring funds directly, SWIFT sends secure, standardized financial messages that tell banks how and where to move money.

The SWIFT code ensures the payment is routed to the correct financial institution before being directed to the individual account. This system enables fast, accurate, and traceable cross-border communication among thousands of banks, credit unions, and payment processors worldwide.

When you need a SWIFT code

You need a SWIFT code when:

• Sending an international wire transfer to another country
• Receiving money from abroad, whether from a business partner, employer, or family member
• Setting up international business payments or vendor transfers that require bank-level identification

Key differences between IBAN vs. 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. Most international transfers require both codes to ensure accuracy.

Geographic differences

IBAN usage is mandatory across Europe and common throughout the Middle East, parts of Africa, and the Caribbean. In contrast, SWIFT codes are used globally, even in countries that don’t use IBAN.

In the United States, for example, banks use domestic routing numbers alongside SWIFT codes to facilitate international transfers. Latin America shows mixed adoption—some countries use IBAN, while others rely solely on SWIFT.

SWIFT isn’t limited to traditional banks. Brokerage firms, payment processors, and cryptocurrency exchanges may also use SWIFT codes for international transactions. Together, these systems ensure funds move securely across borders: SWIFT routes payments to the correct bank, and IBAN directs them to the specific account.

Why are IBAN and SWIFT codes important?

IBAN and SWIFT codes make global banking possible by helping financial institutions accurately identify accounts and banks across borders. Using standardized formats reduces input errors that can delay or misdirect international transfers.

These systems also enable automated validation checks that catch mistakes before money is sent, preventing costly payment failures. Together, they’ve made cross-border transfers faster, more secure, and more transparent for businesses and individuals alike.

If your company operates internationally, accurate IBAN and SWIFT details are essential:

• 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

How to find your IBAN and SWIFT codes

Before sending or receiving money across borders, you’ll need the correct banking details to make sure your payment reaches the right place. Here’s how to locate your IBAN and SWIFT code.

Finding your IBAN

Finding your IBAN is straightforward:

• Bank statements: Check your printed or digital statements or online account details. The IBAN is usually listed near your account number or branch information
• Mobile app: Use your bank’s mobile app. IBANs are often displayed under account information, transfer settings, or international payments
• IBAN calculator: Try an official IBAN calculator, but only on your bank’s verified website. Avoid third-party sites, as entering sensitive account information can pose security risks
• Physical bank card: In some countries, such as the UK or parts of the EU, your IBAN may appear on the front or back of your debit card

If you still can’t find it, contact your bank directly for confirmation. Before sending any international payment, double-check all details through secure channels and consider sending a small test transfer first to verify accuracy.

Finding your SWIFT code

You can locate your bank’s SWIFT code in several ways:

• Bank statements: Review your printed or digital bank statements. Many banks list the SWIFT or BIC near your account or routing details.
• Online banking portal: Log in to your online banking portal or mobile app, and look for sections labeled International Transfers, SWIFT/BIC, or Wire Transfers
• Bank website: Visit your bank’s official website and use their published SWIFT code directory or lookup tool to confirm the correct code
• Customer service: Contact your bank directly or use the official SWIFT website’s BIC search tool for verification. If your bank has multiple branches, confirm you have the correct branch code; using the wrong one can delay your transfer.

Practical examples and use cases

Seeing how IBAN and SWIFT codes work in real-world scenarios can make international payments easier to understand. The examples below walk through what to expect when sending, receiving, or managing global transfers.

Sending money from the U.S. to Europe

IBAN and SWIFT codes work together to create a complete addressing system for international money transfers. Here’s how they function in practice when sending money from the United States to a European country:

1. Provide transfer details: Share the recipient’s full name, IBAN, and the European bank’s SWIFT or BIC code with your U.S. bank
2. Bank communication: Your US bank uses the SWIFT code to identify and securely communicate with the recipient’s bank through the SWIFT network
3. Intermediary banks: If the two banks don’t have a direct relationship, a correspondent bank acts as an intermediary, using SWIFT codes at each step to route the payment
4. Funds credited: Once the transfer reaches the destination bank, the IBAN ensures the funds are credited to the specific account holder

Requirements can vary by country. Within the European Union, an IBAN is often enough for transfers between Single Euro Payments Area (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 countries with specialized banking systems or additional compliance checks.

Receiving international payments

To receive funds from abroad, provide the sender with your IBAN, SWIFT or BIC, full name, and bank address. Some banks may also require intermediary bank information or currency instructions, depending on the country and currency involved.

For example, US banks typically receive international payments in USD through correspondent banks using SWIFT codes. In contrast, European banks rely on IBANs for SEPA transactions. Always confirm your bank’s specific requirements before receiving money to avoid delays or returned transfers.

Business international transfers

Accurate IBAN and SWIFT details keep your business payments running smoothly across borders. They’re essential for avoiding delays and errors when paying international contractors, vendors, or remote team members.

Many companies that operate internationally maintain multiple currency accounts, such as EUR, GBP, or JPY, to reduce conversion fees and simplify international settlements. This setup allows finance teams to process vendor invoices and payroll efficiently while minimizing currency exchange costs.

IBAN and SWIFT code costs

When you make international transfers using IBAN and SWIFT codes, you may encounter several 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 or correspondent bank fees: Deducted as your money passes through their systems

Typical costs 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.

Factors that influence transfer costs

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 that need 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.

Common mistakes to avoid

Even small errors can delay or block an international payment. Watch out for these common issues:

• Using the wrong code type: Some countries don’t use IBANs, such as the U.S. and Canada, so check whether your transfer requires a SWIFT code instead
• Confusing SWIFT codes with routing numbers: In the U.S., routing numbers are for domestic transfers only. For international payments, you’ll need your bank’s SWIFT code.
• Typos and formatting errors: A single incorrect character can cause a failed or misdirected payment. Always copy codes directly from verified sources.
• Not including both codes when required: Many international transfers require both the IBAN and SWIFT code to route funds correctly
• Using outdated codes: Banks sometimes change their SWIFT codes after mergers or rebranding, so confirm details with your bank before initiating a transfer

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.

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: We support 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 with the Ramp Business Credit Card and earn cashback with vendors that accept Visa
• Check payments: For US-based vendors who still prefer checks, we can issue and mail checks on your behalf

Get started with a free interactive demo.