Know your IBAN!
In an effort to ensure that the local business community is geared up for the eventual standardization and harmonization of electronic payments in euro within the Single Euro Payments Area (SEPA) in 2014, the Malta Bankers’ Association (MBA), in collaboration with the Central Bank of Malta, has been holding regular talks with the local business community. In line with this communication process, the MBA will also be issuing a series of communication messages to inform the general public of the changes which the SEPA project will bring about. One such change is the adoption of the International Bank Account Number (IBAN), an international standard for accurately identifying individual bank accounts, even across national borders.
Until now, bank customers have normally used, and mostly been familiar with, the 11 to 13-digit account number known as the Basic Bank Account Number (the BBAN). This is the account number which is printed on cheque forms, as well as on all bank statements. The IBAN includes the BBAN, but additionally also contains other alphanumeric characters which serve to identify the particular bank and branch in the country where the account is held. This is why the IBAN is much longer than the BBAN.
The IBAN is now assuming a greater relevance when carrying out payment transactions. The reason is that following the creation of a single euro currency, the EU has undertaken a project to create a Single Euro Payments Area (SEPA) in order to standardize and harmonize electronic payments in euro within the SEPA area. This means that all credit transfers and direct debit payments in euro within this area will have common features, terms and conditions. As such, there will no longer be any distinction between domestic payments effected within the same Member State, and cross-border payments made by a payer in one Member State to a beneficiary in another Member State. This is where the IBAN comes in, because it is mandatory that all SEPA payments quote the IBAN, and not the BBAN, of the beneficiary of a credit transfer, or the payer of a direct debit.
In practical terms, therefore, persons who receive payments directly to their bank accounts by means of credit transfers should be able to advise their IBAN to the payer when this is requested by the latter. This applies equally to domestic payments such as, for example, payments of pensions and social security benefits, salary payments, and the payment of interest and dividends on local investments. Likewise, in the case of direct debits, the service provider will need to know the payer’s IBAN in order to collect payments when due.
In Malta, the IBAN consists of 31 alphanumeric characters, and is printed on all bank account statements (in addition to the BBAN). It should therefore be readily available to all current and savings account holders when required. Moreover, most banks also provide facilities through their electronic channels (websites / internet banking / ATMs) whereby customers can access their IBAN. In case of any difficulty, account holders should contact their respective banks.