Frequently asked questions

IBAN & BIC

IBAN - European Payments Council (EPC) Resolution

General

Making Payments - general

Receiving Payments

IBAN & BIC

What is an IBAN?

IBAN is an acronym, which stands for International Bank Account Number. It is a standard way of uniquely identifying an account for the purpose of improving the efficiency and speed of cross border payments. IBANs have been developed by the European Committee for Banking Standards (ECBS) and the International Standards Organisation (ISO) who have published an internationally agreed standard (ISO 13616:1997). This standard has since been updated for EU purposes in EBS204.

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What is a BIC?

A BIC is an acronym, which stands for Bank Identifier Code. It can be used to identify your bank, when receiving payments. You may already quote your BIC on your invoices or payments to your account.

The BIC can be either 8 or 11 digits in length, and the NatWest BICs are shown below as examples:

NWB
NWBKGB2L (8 digits)
NWBKGB2LXXX (11 digits)

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IBAN - European Payments Council (EPC) Resolution

What is being introduced in this resolution?

There are three basic elements:

  • IBAN & BIC are to be the only identifiers allowed from 1/1/2006 on cross-border EU/EEA payments.
  • Cross-border payments can continue without IBAN & BIC during 2006, but the Bank processing the payment may charge extra for processing this type of payment. This charge may be passed to the customer who failed to provide the correct information when requesting the payment.
  • Banks can reject payments from 1/1/2007 that do not contain IBAN & BIC in the correct format.

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Why is the resolution being introduced?

The banking industry in the EU & EEA has been working through the European Payments Council with the European Commission to standardise and simplify the way cross-border payments are made. There is a goal to create a SEPA (Single Euro Payment Area), which will have a single common way of making payments across the EU.

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What is the European Payments Council?

The European Payments Council (EPC) is the decision-making and co-ordination body of the European banking industry in relation to payments. For more information see: http://www.europeanpaymentscouncil.org

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Why does the resolution simplify payments?

All the member countries of the EU had different ways of expressing domestic account numbers and the formats for making domestic payments:

  • The IBAN provides one common style, (even though they look different) of account number format across the EU & EEA. IBANs have self-checking data within them, so if the numbers are missed, added or transposed, the error will be detected by the sending bank.
  • Banks sending IBANs in the EU have the responsibility to check the data is valid before it is sent.
  • Used with a BIC, an IBAN allows a payment to be routed through to the beneficiary's account in a fast & efficient way.
  • Creates a common way to make cross-border payments.

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Why change?

It is the European Commission's objective to drive down the cost of making cross-border EU payments to domestic levels. The European Payments Council share this objective. If costs of making payments are driven down, then it is the customer who will ultimately benefit from the initiative.

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Does it affect all payments or just euro payments?

Strictly speaking the resolution applies to euro payments. However any payment to the EU/EEA has the potential to be converted to local currency. NatWest strongly recommends the use of IBAN & BIC for all payments you make or are likely to receive from the EU & EEA. This includes sterling invoiced for settlement from the EU & EEA.

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Does it affect sterling payments within the UK?

Sterling payments have their own standards:

  • Continue to use sort code and account number as identifiers for sterling payments. BACS and CHAPS apply slightly different standards and these are unaffected by the resolution.

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Why have you issued me / my company with an IBAN and a BIC?

Legally we have had to issue you with an IBAN and a BIC to be associated with it since 1 July 2003. IBAN & BIC information has appeared on your paper statements for these currencies since 1 July 2003. If you trade with companies in Europe, since this date you have had to provide details of your IBAN & BIC on invoices issued.

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What is an IBAN used for?

It is for use as a substitute for an account number when making or receiving cross-border EU/EEA payments. The IBAN uniquely identifies the account to be credited. You will be asked to use an IBAN & BIC when settling invoices and you should quote this information on your invoices to avoid your counterparts asking you for this information and thus delaying your payment.
The IBAN includes a verification element that checks the content of the IBAN to ensure that the sender has quoted your IBAN details correctly. Banks in the EU have to check this verification element & ensure it is correct before the payment is sent.

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General

How and when should I use my IBAN?

You should use your IBAN & BIC for invoicing and for instructing a foreign bank to make payments to your account. The IBAN & BIC should be used instead of account number and branch detail in cross border payments. You can also use IBAN & BIC for intra UK currency payments. For domestic sterling payments, it is advisable to continue to use sort code and account numbers as the account identifier.

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Why should I use an IBAN & BIC?

An IBAN & BIC is all that you need to identify your account and account holding bank details to a payment counterparty. Use of this information by the counterparty and their bank should ensure efficient and speediest transfer of funds to the account nominated by you in the IBAN.

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What is the difference between an IBAN and my account number?

Your account number and branch details are the primary way in which the bank identifies your account. Your IBAN is used for receipt of cross border payments in your favour to identify your account in a uniform way. It allows the sending bank to validate that the IBAN data provided is in the correct format.

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Do I have to use IBANs?

Yes you do. You must use IBANs and BIC provided by the beneficiary, if you want to make a payment to the EU/EEA. Conversely, if you expect to receive payments from the EU/EEA, then you must make your IBAN & BIC available on your invoices. Your counterparty is likely to ask for this information if you fail to provide it. Because an IBAN uniquely identifies your account, the IBAN contains information which checks itself, and because of this, you will appreciate that payments can be applied to your account quickly and with confidence.

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Must I start using IBANs on domestic invoices?

Sterling Payments

The CHAPS community is not adopting the IBAN. BACS payments continue to use account numbers and branch sort codes. You should not attempt to use an IBAN in a BACS payment. Therefore if you use a mix of BACS and CHAPS to receive domestic payments, it is advisable to use account number and sort code for consistency. Please note that domestic Standing Orders and Direct Debits will also continue to use account numbers and sort codes.

Currency Payments

Whilst the Resolution currently only applies to cross border payments, IBAN & BIC can also be used for currency payments sent within the UK

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Making Payments - general

What do I have to do, if I make payments to the EU & EEA?

You must give the IBAN & BIC account number information to the Bank, if it is provided. You should

  • Ignore any Bank name & address information and omit from any form you submit to the bank. The name & address information is already provided in the IBAN & BIC details.
  • Use the IBAN as the account number and ignore any account number details, because the account number is in the IBAN. Again do not provide both pieces of information.

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What if I have not been given an IBAN & BIC?

It is a legal requirement for all accounts in the EU & EEA to have an IBAN & for a BIC to be associated with the IBAN. This information must be displayed on statements.

  • You should ask the beneficiary for their IBAN & BIC details.
  • You should advise the beneficiary that the payment may be delayed or subject to additional charge if this information is not provided. The beneficiary's bank is entitled to reject the payment after 1/1/2007.

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What if I provide additional Bank & account details and account number?

Payments are liable to be charged if Bank name & address is included in addition to the BIC. Similarly if an account number and IBAN are included in the account number line of data, then this is no better than account number. The IBAN checking will fail and -

  • additional charges may be applied,
  • your payment may be rejected,
  • you may have the payment returned by the paying bank with penal charges deducted.

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Should I use a beneficiary's IBAN on my outward payments, if a beneficiary provides this to me?

If your payment counterparty gives you an IBAN and a BIC, then this must be quoted in your payment instruction to the bank. NatWest will check the validity of the IBAN before making payment. Use of the IBAN should ensure that the payment is handled promptly within banking payment systems.

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Should I also provide an IBAN if my payment is being sent outside the EU / EEA?

It is unlikely that the beneficiary will have been issued with an IBAN if their account is held with a Bank outside the EU / EEA. If an IBAN has been issued, this should be used, but if not you should continue to obtain the same account information as you do currently, i.e. BIC and account number / sort code (or local equivalent)

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Receiving Payments

I receive payments. How does the resolution affect me?

If you receive funds from the EU & EEA, then you should:

  • Provide the payer with the BIC as Bank details
  • Provide the IBAN as your Account number
  • Do not provide any Bank name & address information. This information is included within the IBAN & BIC
  • Do not give your account number as well as IBAN. Your account details are in the IBAN

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What if I do not provide IBAN & BIC information to the payer?

The paying bank may decline to make the payment, which will detrimentally affect your cash flow. If the paying bank agrees to make the payment, then it may levy extra charges for making the payment.

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I invoice to the rest of the world as well; can I use IBAN & BIC for other countries?

Yes you can. The difference is that Banks in the rest of the world are unlikely to check the validity of the IBAN mathematically. You can quote the IBAN as your account number and the BIC as your bank details in the same way that you present the information for EU & EEA. The information is sufficient for the payment to reach your account at NatWest.

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Should I include BOTH my account number and IBAN on my invoice instructions to payment counterparties?

No, IBAN is better and essential for cross-border intra EU & EEA payments. Both should not be used. If both are sent in the payment, then this might delay your payment, incur increased charges or run the risk of rejection with penal charges.

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Which do you recommend that I use, IBAN information or Account number information?

Either types of information can be used. However, if you are trading in Europe then you must use IBAN information. In view of the flexibility of our systems in recognising either information, we would suggest that IBAN information would work better in covering all eventualities. This would be the case especially if you trade both within Europe and outside of it. We recommend that if you use an IBAN you simply call it your account number.

e.g.
NatWest Customers -
IBAN BIC: NWBKGB2L
Account Name: The name of your account
Account Number: Your IBAN

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Will Banks outside of the Europe area accept an IBAN?

An IBAN can be used instead of your account number. Any bank will simply pass on the 'account number' as they are given it. All banks in the International Payments community should be aware of IBAN initiatives, even if their country is not using IBAN formats at present. They should therefore accept your IBAN & BIC instead of your usual account number and sort code.

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Do all IBANs look the same?

All UK IBANs are the same length and format. IBANs of other countries look different, although, commonly, they all begin with the ISO country code of the country where the account is held. For example all UK IBANs commence 'GB' and all German IBANs commence 'DE'. IBANs from different countries follow different formats and therefore will be a different length to a UK IBAN.

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Should I try to calculate my IBAN or the IBAN of my counterparty?

No, you should not. NatWest will calculate your IBAN for you. If you try to calculate this yourself there is a risk of incorrect calculation. You should never try to calculate IBANs of your counterparties using the account number information given by them. If you need to make payment to a counterparty using IBAN information, then you should ask that counterparty for the necessary information.

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Please read the important legal information


Find out more

Find out more

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