Implementing IBANs

Implementing IBANs in the payment chain will involve the steps provided in the following example:  

1. An issuing bank provides the IBAN+BIC to its customers for an account that is likely to receive payments from abroad. The IBAN is derived from the existing domestic account number for that customer 
2. The customer (who, for the purposes of this example, may be a UK business) encourages their trading partners to use their IBAN+BIC by specifying it on invoices.  
3. When the customer wants to pay their trading partner they will instruct their bank to pay, quoting the IBAN+BIC that their trading partner has provided on the invoice.  
4. The correspondent bank within the country of the beneficiary trading partner will recognise the payment as destined for that country from its country code. It extracts the domestic account format and uses it to complete the transfer.

The issuance of IBANs to UK customers

As a community, UK banks have decided that issuing IBANs is a non-competitive activity. UK banks have been issuing IBANs at their own pace, or on request from customers.

Processing IBANs on outgoing cross-border payments

IBANs are already being issued by some European banks to their customers. Consequently these corporates will request that their UK trading partners direct payments to IBAN-numbered accounts. It is anticipated that, over the next few years, IBANs will appear in increasing volume.

For more information on IBANs, please contact:

UK Payments Administration Ltd
Standards Unit
2 Thomas More Square
London
E1W 1YN

Tel: 020 3217 8299
Fax: 020 7488 4566