All you need to know about BIC and IBAN

On February 1st, 2014 something changed in the way we make our payment orders. Since then, the countries of the SEPA zone, the Single Euro Payment Area including the 28 member states of the European Union, Norway, Iceland, Liechtenstein, Switzerland, Andorra, Vatican City State, Monaco and San Marino, have been using the same, unique credit transfer and direct debit system. SEPA credit transfer and SEPA direct debit, which have replaced the domestic transfert and direct debit for national as well as for cross-border payments, require the use of European standards for bank accounts: IBAN and BIC. These two acronyms are probably not unfamiliar to you but what do they mean exactly?

What is IBAN?

IBAN (International Bank Account Number) is an international standard that identifies a determined account in a financial institution anywhere in the European Union. This unique number may contain 14 to 34 alphanumeric characters and has a fixed length for each country. If you have a bank account in Luxembourg, the IBAN will have 20 alphanumeric characters: the code of the country of origin with 2 letters (LU for Luxembourg), the check-digit with 2 digits and your national bank account number with 16 digits. 

When you make cross-border payments, don’t forget that the IBAN can have a different length from one country to another. The IBAN has 16 alphanumeric characters in Belgium, 27 in France and 22 in Germany. 

What is BIC?

BIC (Bank Identifier Code) is an international standardised code. It has 8 to 11 alphanumeric characters and is used to identify the financial institution where you have a bank account. You have to provide it when you make your cross-border transfers.   

The BIC is also known as the SWIFT code (Society for Worldwide Interbank Financial Telecommunication). For example, the BIC for ING Luxembourg is CELLLULL.

Why do we need these codes?

For two main reasons. Firstly, they allow your bank to make cross-border payments more easily. These codes enhance the accuracy of a bank account to be checked, facilitate the automatic treatment of foreign transfers and make the system more secure and finally less expensive for you. 

The second reason is more practical. Without using the BIC and IBAN, you can’t make money transfers in the European countries. If you don’t have the BIC and IBAN of your creditors, you must contact them to get the information. The same problem will arise if you don’t transmit your IBAN and BIC to your debtors.

And if you state the recipient’s IBAN but not the BIC when making a cross-border transfer, you will pay more. The BIC is one of the requirements that you have to meet in your payment orders to other European countries if you want to benefit from the same rates as for national payment orders. However, you don’t have to state the recipient’s BIC when making a national transfer.

If you have any doubts or questions, please contact your banker. He will help you to avoid losing money!


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