BIC & IBAN
Mandatory Changes for Cross-Border Payments from 1st January 2007
The International Bank Account Number (IBAN) and Bank Identifier Code (BIC) are mandatory since 1st January 2007, as the only beneficiary customer account identifier and bank routing designation accepted by banks in the EU/EEA area for all intra-EU/EEA euro cross-border credit transfers, in accordance with EU Regulation 924/2009 (formally 2560/2001). From this date, banks receiving payments with other identification are entitled to return or reject, as a matter of normal practice.
The European Payments Council (EPC) approved a resolution in June 2005 to promote the widespread use of BIC and IBAN.
BIC and IBAN - Frequently Asked Questions
Q: What is BIC?
A: The BIC or Bank Identifier Code (also known as the SWIFT address) is a unique address which in payment messages identifies precisely the bank involved in financial transactions. When used in conjunction with the IBAN it identifies the bank at which the account of the beneficiary is held.
Q: What is IBAN?
A: IBAN stands for International Bank Account Number, and the concept was developed by the European Committee for Banking Standards (ECBS) and the International Standards Organisation (ISO) and is an internationally agreed standard (ISO 13616: 2003). It was created as a viable and practical international bank account identifier, used internationally to uniquely identify the account of a customer at a financial institution, to assist error-free cross-border payments and to improve the potential for straight-through payment processing. EU banks are legally required to provide their customers with an IBAN for each bank account. An example of an Irish IBAN is: IE64IRCE92050112345678.
Q: Where can I find the BIC and IBAN for my accounts?
A: Your BIC and IBAN are printed on your bank statement. You can also request them directly from your bank.
Q: Why are they important?
A: The BIC allows for easy identification of the beneficiary bank. Since 1st January 2007, all cross-border payments to the Single Euro Payments Area (SEPA) in euro, must include both the BIC and IBAN of the beneficiary’s account. Using both will allow your bank to process your cross-border payments in an efficient manner. Payment instructions that do not include the beneficiary’s IBAN and the beneficiary bank’s BIC code will not be accepted by Irish banks. The IBAN is the standard format for bank account numbers in cross-border payments within Europe.
Q: Does the IBAN replace my existing account number?
A: No, your IBAN does not replace your existing account number. It is important to remember that IBAN is not a new account number but simply a new format for an existing account number which is recognised internationally. Development of SEPA in Europe has lead to increased usage of the IBAN format for national euro payments.
Q: Who will need to use BIC and IBAN?
A: All Irish businesses and individuals making or receiving cross-border payments in Europe are required to use the mandatory pan-European banking codes since 1st January 2007. There is a risk of a delay to payments if the numbers are not used . Those making payments will be required to provide the BIC and IBAN of the beneficiary on their payment instructions, banks will not accept outgoing payments to the SEPA area without a valid BIC and IBAN. Recipients of payments from abroad will need to provide their BIC and IBAN to those sending the payments. Failure to do so could result in foreign banks refusing to accept these payments, thus resulting in a delay for the receiver of the funds.
Q: Why has this change been made?
A: It is the European Commission’s objective to create a Single Euro Payments Area (SEPA), with no frontiers, for cross-border payments in Euro. Traditionally cross-border credit transfers were generally more expensive and difficult to process. This was due to the fact that national payment standards in Europe were not compatible and necessitated costly manual intervention by banks to complete. Therefore the European Commission implemented legislation — EU Regulation 2560 — requiring banks to charge the same price for cross-border euro transfers in Europe as for equivalent national euro transfers. The EU recognised that the banks could only offer such a service if cross-border payments could be processed as efficiently as national payments and therefore supported the banks in the development of the BIC and IBAN standard.
Q: Can you use BIC and IBAN for payments all around the world or is it just Europe?
A: While the IBAN concept was developed as an account number standard to facilitate the creation of SEPA, other countries have also adopted the IBAN standard.
Q: Will I still be able to receive payments from abroad to my account number and NSC?
A: Since 1st January 2007, the European banks require BIC and IBAN details to make euro payments. Payments from outside of Europe may continue to be received with the account number and sort code, however it is recommended that your BIC and IBAN details are supplied to your Payers worldwide as these are required since the SEPA project was implemented. It is important to remember that IBAN is not a new account number, but simply a new format for an existing account number that will be recognised internationally. An IBAN contains characters additional to a country’s domestic account number. These characters consist of a two-letter country code (IE is the Irish country code), followed by a two-digit check number. Ireland has incorporated a bank code in front of the standard domestic account number to clearly identify the account holding bank. Your IBAN will incorporate your account number and sort code number. However, if you do not provide your full BIC and IBAN to those within the relevant countries when making payments to your account you run the risk of delays in receiving the payments.
Q: If I receive payments from abroad, are there any recommendations for me to ensure there is no interruption to inbound transfers to my account?
A: To ensure that your payments reach your account on time, receivers of payments from abroad will need to provide their BIC and IBAN to those making payments to them. This can be achieved easily and without fuss by ensuring that your BIC and IBAN are clearly printed on all invoices issued.
Q: What happens if I don’t use the IBAN and BIC?
A: If you do not use BIC and IBAN outgoing payments will not be accepted by banks within SEPA.
Q: What happens if I input correct details for the recipient (e.g. name) but enter an incorrect but valid IBAN on a payment instruction?
A: It is crucial that the correct IBAN is used when instructing your bank to make a payment. Providing an incorrect but valid IBAN could result in the payment being delayed, not being received at all, or being processed to an account relating to the incorrect IBAN provided. While the financial institutions concerned will attempt to resolve any issues, there is a risk of Payers incurring a loss if incorrect information is provided, so it is vital that the correct details are provided.
Q: Where can I find out more about this?
A: You can ask your bank for more information.
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