ECB: Does paying via IBAN automatically mean the transfer is free of fees?
Banking
Asked by Question Bot10/Jul/20141 answer
1 Answer
F
Faisal Khan
Answered 10/Jul/2014
No. The payment is by no way or means free, just by adapting an IBAN Code.
What the IBAN does it, it provides a homogeneous methodology of mapping banking accounts to a unique identifier, that would be understood by all financial institutions world over.
Currently, each country and the banks within that particular country, are free to follow their own methodology of how bank accounts numbers are mapped out.
Every year, for cross-border transactions, millions of transactions are put on hold (remember this is real money, put on hold), just because the bank account information was incorrect.
Because there is no universal system of addressing this, system integration and specifically being able to understand the account number requirement for each and every bank, becomes a humongous task for payment networks, and the banking industry itself.
By providing a common denominator to all banking institutions worldwide, one is guaranteed that no matter where in the world your bank account it, and what numerology it adopts internally for bank account numbers, the IBAN would always be universal, uniform and addressable. Meaning - it will make life simple for millions.
This of it this way, imagine if each country was allowed to define how an IP address might look like. USA could have the Quad-Dotted Notation (A.B.C.D), whilst Australia could have a totally different one A.B.C.D.E.F and so on an so forth.
By bringing them under the same umbrella, the issue becomes much more simpler. This is what the IBAN attempts to do.
What the IBAN does it, it provides a homogeneous methodology of mapping banking accounts to a unique identifier, that would be understood by all financial institutions world over.
Currently, each country and the banks within that particular country, are free to follow their own methodology of how bank accounts numbers are mapped out.
Every year, for cross-border transactions, millions of transactions are put on hold (remember this is real money, put on hold), just because the bank account information was incorrect.
Because there is no universal system of addressing this, system integration and specifically being able to understand the account number requirement for each and every bank, becomes a humongous task for payment networks, and the banking industry itself.
By providing a common denominator to all banking institutions worldwide, one is guaranteed that no matter where in the world your bank account it, and what numerology it adopts internally for bank account numbers, the IBAN would always be universal, uniform and addressable. Meaning - it will make life simple for millions.
This of it this way, imagine if each country was allowed to define how an IP address might look like. USA could have the Quad-Dotted Notation (A.B.C.D), whilst Australia could have a totally different one A.B.C.D.E.F and so on an so forth.
By bringing them under the same umbrella, the issue becomes much more simpler. This is what the IBAN attempts to do.