International Bank Account Number (IBAN)

As a part of the European Union regulations, an International Bank Account Number, or IBAN, was developed in order to increase the quality and speed of money transfers between different countries and also to decrease their cost. IBAN is currently in use in 33 European countries.

IBAN is designed to prevent errors in money transfers between banks and other financial institutions in European countries and thereby to eliminate the delays that result from those errors. Thanks to IBAN, funds move from the sender's account to the recipient's account more quickly and with less possibility of error; this means that delays resulting from mistakes in transactions and the resulting additional costs are eliminated.

How does IBAN make Account Holders' lives easier?

Today, bank account numbers in different countries and at different banks are in different formats and of different length. Because of this, customers who are going to make a transfer to another country or another bank cannot be sure that the information they have received from the person to whom they will make the transfer is correct, since there is no standard type of account number.

In the case of purchasing goods or services, invoices from various sellers all have different types of account numbers, which increases the likelihood that importers or the person handling the transfer will make a mistake. The result is that transfers are made to incorrect bank accounts, but unfortunately it only becomes clear that funds have been sent to the wrong account when they are transferred to the other bank. To correct this error requires several additional transactions, resulting in delay and unnecessary expense.

In countries that have adopted the IBAN system, account holders are given an IBAN for each of their different account numbers. IBAN has a specific form and standard for each country, and there is a two-step "control number" in the IBAN that is created by a special encoding algorithm. When a customer who wants to make a transfer to another country or another bank gives an IBAN to their bank, before the funds are sent, the sending bank checks the IBAN with the recipient bank. If the IBAN is incorrect, the funds are not sent and an incorrect transfer is prevented.

Using IBAN

Let's take the example of Mr.Smith, who lives in Germany and wants to send money to his son Paul who is in Turkey.

• Paul, if he doesn't know, goes to X bank and finds out his account's IBAN number.
  
• Paul gives his IBAN number to his father.
  
• After receiving the IBAN number of the account to which funds are to be transferred, Mr.Smith goes to Y bank in Germany. Mr.Smith gives his son's IBAN number to the teller at Y bank and says that he would like to make a transfer to this account.
  
• The teller at Y bank checks their computers to make sure that the IBAN Mr.Smith has provided is correct. If the IBAN is correct, the transfer is made.

When a transfer is made using a correct IBAN, once the transfer message from Y bank in Germany reaches X bank in Turkey, the amount Mr.Smith sent is automatically credited to his son Paul's account.

The IBAN Standard (How are IBANs created?)

IBAN is a unique number, composed of letters and numbers, that indicates one account number that is unique among all the bank account numbers in the world. Every account has an IBAN, and each IBAN is assigned to only one account.

An IBAN consists of a maximum of 34 alphanumeric characters. The first four digits of an IBAN consist of the two-letter country code and the two-digit control number. The rest of the IBAN consists of the national bank account number. Each country independently specifies this portion on the condition that the total length of the IBAN is not to exceed 34 digits.

Turkey has specified a 26 digit IBAN. A Turkish IBAN is composed of the following:

Some European IBAN Standards are listed below:

IBAN Display in Electronic Form and Hard Copy

When the IBAN number is used in or stored in electronic form (for example, entry of the IBAN into a computer or directly onto the screen) all letters and numbers should be written one next to the other without the use of spaces or any other separating characters (ex. slash, comma, dash, etc.). This form of display is referred to as "electronic display".

Display of the IBAN printed on paper is referred to as "written display". In this form of display, the IBAN is written divided into groups of four characters from right to left with spaces in between them. When numbers are written in groups of four, if, due to the length of the IBAN, there are additional characters, these are written one next to the other.

IBAN Electronic Display
TR5600061000 00012990022302

IBAN Written Display
TR56 0006 1000 0001 2990 0223 02

IBAN use in Turkey

Turkey began use of the IBAN as of September 1, 2005. As of this date, all banks operating in Turkey began creating IBAN numbers for customers who requested them and for all accounts (YTL and FX Current Accounts) that sent or received transfers.

As of September 1, 2005, banks also began sending international transfers using IBANs and began accepting transfers from abroad using IBANs.

Use of IBANs in Domestic Money Transfers

As of September 1, 2005, banks began using IBAN for domestic money transfers (EFT transactions), just as they do for international transfers.

Thus, as of September 1, 2005, customers began being able to send an EFT transfer from a bank or other financial institution in Turkey to another bank or financial institution in Turkey using IBAN.

For money transfers made using IBAN, there is no need to provide the recipient's branch name, city or other details, because it is possible to complete the transfer using only the account number.

In this fashion, just as in international transfers, in EFT transfers between Turkish banks, the risks resulting from incorrect or incorrectly entered account information, such as delay or deposit to the wrong account, are eliminated.

Whether for international or domestic transfers, IBAN use is not mandatory, and transfers can still be conducted using existing conventional bank account numbers. Use of IBAN in money transfers is at the discretion of the sender and the recipient.

What should customers do?

Apply to your bank to receive IBAN numbers for your accounts. You can only receive the IBAN numbers for your accounts from your bank. No other individuals or institutions are authorized to create IBAN numbers.

To enjoy the conveniences that come from using IBAN, provide people who are going to transfer funds to you with your IBAN, and ask people to whom you are going to send international or inter-bank transfers for their IBANs. Wherever possible, make sure that IBAN information appears on documents sent to companies with which you trade or documents provided people, companies or institutions that are going to make transfers.

The risk of mistakes in transfers made using IBAN is extremely low, and transfers made using IBAN are completed faster than those made using conventional account numbers. For this reason, you should use IBAN not only for your international transfers but also for your domestic EFTs and transfers.

For More Information

For more information about IBAN, please contact your bank or the Banks Association of Turkey.

Further information is also available on your bank's website or the Banks Association of Turkey website.

The Banks Association of Turkey
www.tbb.org.tr