IBAN Overview
To improve the efficiency of cross border Euro payments, a standard was created for bank account numbers which was designed to include all relevant information required to make a payment. This included the exact coordinates of the bank holding the account and the account number. The standard was defined by ISO 13616:1997 and later updated to ISO 13616:2003.
In December 2001 the European Union regulation 2560/2001 was published which required banks to adhere to this standard and provide the International Bank Account Number (IBAN) and a SWIFT/BIC (Bank Identifier Code) to all Euro account holders in European Union countries in preparation for the introduction of SEPA.
The IBAN is used to identify an account, and the country and bank where it resides. It is to help simplify the processing of Euro cross border payments. The introduction of IBAN has now become integral to the Single Euro Payments Area (SEPA) which is designed to increase the security, to simplify, speed up and reduce the cost of Euro payments within the SEPA region of countries.
Since July 2003, most cross border European Union payment transactions between European banks are processed and validated by means of IBAN account numbers. From January 1st 2007 it became a requirement to quote the IBAN and payment BIC of the beneficiary when making a payment. The significant advantage of using IBANs under the SEPA scheme is that a cross border payment in the area is regarded as a domestic one and will cost less.
If you do not yet have an IBAN , then ask your bank for it. EU Regulation 2560/2001 requires banks to provide the IBAN and their BIC (Bank Identifier Code) to their customers. This resulted in the requirement for Banks to display the IBAN and BIC on customer statements from 1 July 2003.