What is an IBAN?
An IBAN (International Bank Account Number) is a standardized way of identifying a bank account anywhere in the world, originally developed in Europe and now used by over 80 countries. Before IBANs existed, every country had its own account numbering format, which made it easy to mistype a payment and send money to the wrong place. An IBAN solves that by building in a checksum — a built-in error-detection mechanism that flags most typos before the payment is even sent.
If you're paying a supplier in Germany, France, the Netherlands, or most of the rest of Europe, you'll almost always need their IBAN rather than a traditional account number and routing code.
How to read an IBAN
An IBAN is a single string of letters and numbers, but it's built from several distinct parts:
Country code (2 letters) — the first two characters tell you which country the account is in. DE for Germany, FR for France, NL for the Netherlands, GB for the United Kingdom, and so on.
Check digits (2 numbers) — the next two digits are a checksum calculated using a standard formula (ISO 7064 MOD 97-10). This is what allows banking systems to catch a mistyped IBAN before money moves — if the check digits don't match what the rest of the number computes to, the payment will be rejected rather than sent to a wrong or non-existent account.
Basic Bank Account Number (BBAN) — the remaining characters, which vary in length and format by country, contain the actual bank identifier and account number. Germany's BBAN is structured differently from Spain's, which is structured differently from Italy's — this is why IBAN length varies by country, from 15 characters (Norway) to 34 characters (some countries), though most fall between 20 and 24.
Here's a worked example for a German IBAN:
DE89 3704 0044 0532 0130 00
DE— Germany89— check digits370400440532013000— the BBAN, which itself breaks down into an 8-digit bank code and a 10-digit account number
Do I always need an IBAN?
It depends on where your supplier's bank account is held:
Within the IBAN zone (most of Europe, plus a growing list of countries including several in the Middle East and the Caribbean) — yes, you'll need the full IBAN. A domestic-style account number alone usually isn't enough information to route the payment correctly.
United States — the US doesn't use IBANs. You'll need a routing number and account number instead (and SWIFT/BIC if it's an international wire).
United Kingdom — the UK doesn't use IBANs domestically either, but a UK IBAN can be calculated from a sort code and account number, which is sometimes needed when receiving international payments. For paying a UK supplier, a sort code and account number is normally sufficient.
Canada, Australia, most of Asia — these countries generally don't use IBANs. You'll typically need a local account number plus either a routing/transit number or a SWIFT/BIC code depending on whether the payment is domestic or international.
Common mistakes that cause payment delays
Missing spaces or extra characters. IBANs are sometimes displayed with spaces every four characters for readability (as in the example above), but some systems require it entered with no spaces at all. If a payment is rejected immediately, this is one of the first things to check.
Confusing IBAN with SWIFT/BIC. These are two different pieces of information that are often needed together for an international wire. The IBAN identifies the specific account; the SWIFT/BIC identifies the bank itself. We cover this distinction in our SWIFT and BIC codes guide.
Using an old IBAN after a bank merger. If a supplier's bank has merged or been acquired, their IBAN's bank code portion may have changed even though the account number stayed the same. Always ask for an up-to-date confirmation if a payment has previously failed or if it's been a long time since you last paid this supplier.
Typing errors despite the checksum. The checksum catches most single-character typos and many transpositions, but it isn't foolproof against every possible error — particularly if multiple characters are wrong in a way that happens to still produce a valid checksum. It's good practice to have your supplier confirm their IBAN back to you in writing, separately from the invoice itself, especially for first-time or high-value payments.
A quick validity check
Most banking portals and payment platforms will validate an IBAN's format and checksum automatically before allowing you to proceed with a payment. If you want to sanity-check one yourself before entering it anywhere, confirm: it starts with a valid two-letter country code, the total length matches what's expected for that country, and it contains no spaces, dashes, or special characters when entered into a payment field (most systems will accept it with spaces for display purposes only).
Why this matters for FX timing
Getting the payment details right is the first step — but for any invoice in a foreign currency, when you make the payment matters just as much as how accurately you enter the account details. A correctly formatted IBAN gets your money to the right place; good timing on the conversion determines how much that payment actually costs you.
See how Easier FX tracks your foreign currency invoices and flags the best time to convert →