IBAN vs Routing Number - What Is the Difference?
Both codes help facilitate transfers and communicate information with regards to identifying the recipient’s bank account — on much different contexts and scales. IBAN number has widespread use in the United Kingdom and verifies the individual bank account, whereas routing numbers are strictly American and are bank-identifying codes only.
What Is an IBAN?
International Bank Account Number (IBAN) was developed as a solution to standardize cross-border payment identification processes. Countries had different systems to codify bank account identification, such as bank name, branch, account number, and routing codes. This has caused much confusion and frequent transcription errors in processing international transfers. International Organization for Standardization began working on IBAN to systemize global bank identification, which has managed to reduce errors in cross-border transfers to under 0.1%.
Alphanumerical characters in IBAN represent the country code, bank name, branch, and account number. It also includes check digits, which verify the accuracy of the code. It is guaranteed to identify any instances where a character is duplicated or omitted, and thus minimize the errors.
Although it includes the same information, IBAN does not replace other identifying agents like the account number, sort code, or routing number. It adds another layer of verification, and within the context of the US, it’s only used for international transfers. IBAN is commonly used across Europe, the Middle East, and the Caribbean domestically as well as for international payments, but the US never adopted it to move funds within its borders.
What Is the Bank Routing Number?
A bank routing number, also referred to as an ABA (American Bankers Association) routing number or RTN (routing transit number), consists of 9 digits used to identify every financial institution in the United States. The number also verifies that the institution maintains an account with the Federal Reserve.
First developed back in 1910, the routing numbers standardized bank identification across the country. The 9-digit code represents information on the bank’s physical location, the Federal Reserve bank routing the transaction, the Federal Reserve check processing center or the bank, the Federal Reserve district where the bank is based, and a security number which is the last digit.
Along with the account number, the routing number is used in processing the Fedwire transfers or ACH direct deposits to identify the recipient’s bank account. Note that ACH routing numbers are often separate from the ABA routing numbers and strictly refer to electronic transfers made via the clearinghouse, like direct deposits. All transfers from and to a US-based bank account require a routing number and the BIC/SWIFT code alongside it if it's an international payment. It's possible to find different routing numbers for different transfer methods, like checks, direct deposits, or wire transfers.
What Is the Difference Between IBAN and Routing Number?
Both IBAN and routing number are numerical systems allowing identification of a specific bank account, and therefore ensuring each money transfer arrives in the right place — but they operate in different contexts.
IBAN is commonly used in other parts of the world, and it is developed to aid in processing cross-border payments. RTN, on the other hand, is a strictly US-based identification system involving institutions located in the country only.
Provided that the arriving country has adopted it, transfers from the US to abroad require the beneficiary account’s IBAN along with other details, and, similarly, when receiving money from abroad, the US-bank holder needs to share their routing number along with other details with the recipient.
When Will I Need an IBAN?
IBAN is required for a bank account registered in a region that has adopted the IBAN system. It allows the account to receive funds through the identification system. Individuals with bank accounts in these countries always need to share their IBAN to receive international payments and, in some cases, for domestic transfers.
However, IBAN is not the only banking detail required, as the sender also needs to know the beneficiary's account number and other regional account identifiers.
US-based bank account holders only need an IBAN for recipients of countries that use the system. They do not require an IBAN to receive money from abroad.
When Will I Need a Routing Number?
The routing number helps identify bank accounts registered in the United States along with the account number, and it is used to receive funds both domestically and internationally. So, regardless of the region or country of origin of a transfer, the recipients need to share their routing number, along with other identifiers, with the sender.
Banks typically use different routing numbers for different modes of transaction. Meaning that the number you’ll need to write a check may not be the same for a wire transfer or direct debit, but all of which are very easy to acquire through the bank.
It's not too much of an issue if the sender uses the wrong routing number. As it’s a bank identifier, the number will not match the account number, and the transfer will be rejected as the information is invalid.
How Does an IBAN Look?
IBAN is comprised of up to 34 alphanumerical characters, and every country has a set length for the numbers.
The first two letters are country codes, like GB for the UK or PT for Portugal.
Check digits allow for verification of the following code’s existence
Basic Bank Account Number makes up the last up to 30 characters, and it may include information on the bank, branch, and account number of the beneficiary. Some IBANs have multiple zeros added to make up for the specified country length.
Come together, an IBAN looks like this;
IE12 BOFI 9000 0112 3456 78 (Ireland)
FR76 3000 6000 0112 3456 7890 189 (France)
BR15 0000 0000 0000 1093 2840 814 P2 (Brazil)
How Does the Routing Number Look?
A routing number is a 9-digit code that is unique to a US bank, also known as the bank ID, and it has three elements:
The first four digits are referred to as the Federal Reserve Routing Symbol, which identifies the institution’s physical location
The second four digits make up the ABA institution identifier, which includes the bank routing the transaction, the check processing center, and the Federal Reserve district the bank is based in
The last digit is the check digit, which ensures there are no transaction errors, similar to IBAN’s third and fourth characters.
Here are some examples;
026009593 (Bank of America)
322271724 (Citibank CA)
121042882 (Wells Fargo CA)
How Does an IBAN Work?
When making a transaction, IBAN helps identify the destination country, bank, branch, and the specific account number of the recipient and verifies the details of the transaction, as it is used to accompany the account number and other account identifying information. Your bank runs the IBAN through their payment system to verify the recipient’s account and begin the transfer.
How Does the Routing Number Work?
American Banking Association manages the routing number system in partnership with Accuity, together they are responsible for assigning every financial institution in the US a routing number.
Each institution gets at least one routing number and may have up to four of them. Some larger banks may have different RTN for their operations in different states, and some may have different numbers for different transfer types.
Routing numbers allow identification with the account number, meaning that it changes from bank to bank but not necessarily from one bank account to another. Two accounts from a single bank, such as checking and savings accounts, may share the routing number but will have different account numbers.
Who Uses an IBAN?
IBAN system was originally developed to be used in the Eurozone, but it quickly spread to the rest of the world. Today it's used throughout Europe, as well as some parts of the Middle East and North Africa. Some countries, including Austria, UAE, Bulgaria, and Kazakhstan, use IBAN to facilitate domestic as well as global transfers.
If a given country, like the UK, has adopted the IBAN system but does not use it domestically, the account holders may not see the code on their bank statements. In those cases, they would need to contact their bank to generate one, so they can accept international payments.
Most notably, North America, Asia, and Oceania countries don’t use IBAN, with US and China being among the largest markets that have not adopted the system. It's also missing in some of the emerging markets, including India and Nigeria. These countries do recognize the system, though, and use it when sending a payment to a country that has adopted it.
Who Uses the Routing Number?
Routing numbers are exclusively used by US-based financial institutions that maintain an account with the Federal Reserve. So no other country uses the RTN identification system as it is used in the US, but they may have country-specific numerical systems with the same function as a routing number.
Where Can I Find an IBAN?
The IBAN is usually located at the top right-hand side of a bank statement. If not found, it's possible to use online generators on banks’ online services or by directly contacting the bank.
The IBAN involves bank and account identifiers and includes the account number in the last 8 digits — but it's not possible to make out SWIFT from an IBAN. It is possible, though, to identify the bank, address, possibly branch, and BIC from an IBAN by validating it from the system’s official checker.
Where Can I Find a Routing Number?
The routing number of a bank is easily accessible through multiple means. It may be at the bottom of your checks, included on your bank statements, or be found through your bank’s web or mobile app services.
Note that some legacy banks may have different routing numbers for different states and different payment methods, so the routing number you may find on your checks may not be the same one used for electronic transfers. If in doubt, you can always contact your bank to verify which one you need.
US Bank Routing Number vs UK Bank Routing Number
While the routing number is a US-based bank identification system, the UK uses sort codes with the same function to identify financial institutions located in Great Britain and the Republic of Ireland. It's a 6-digit number code divided into two components: the first two digits identify which bank it is, and the last four verify the specific branch of the bank at which your account is registered.
Similar to routing numbers, sort codes are used domestically or when sending money to the UK from abroad. Note that although the UK is in the IBAN registry, it accepts payments both via IBAN and sort code.
Are SWIFT/BIC Codes Different from IBAN and Routing Numbers?
BIC, an acronym for Bank Identification Code, is used within the SWIFT messaging system to identify banks globally. The terms are interchangeable, and the code consists of 8 to 11 digits, with each bank having its own unique BIC/SWIFT codes. It doesn’t replace other bank identifying codes or numbers even when their functions overlap, including IBAN, account number, or routing number, but is used alongside them.
BIC/SWIFT code is used for international transfers only and is required to send and receive global payments — it uniquely verifies the name, country of origin, and potentially the branch of a bank. It's typically found on the bank's website or mobile applications.