IBAN, What Else?

Payments are an essential part of global commerce. It is therefore important to simplify and standardize them as much as possible. The IBAN mandate is designed to make payment processing more efficient, secure, and transparent.

Since October 2016, under the EU’s SEPA regulation, banks are only allowed to process payments with an IBAN. This allows payments to be identified and matched more quickly and accurately in straight-through processing, i.e., without manual intervention. Banks can rely on a uniform IBAN structure. In addition, IBAN has a check digit so that typos and transposed numbers can be identified and corrected at the time of entry. This in turn means that transactions are significantly cheaper and banks and companies can use their resources more efficiently.

In addition, the use of the IBAN provides enhanced security measures. Because it uniquely identifies accounts, banks can more accurately match payments, making it easier to detect fraudulent transactions and prevent money laundering. This makes money flows more transparent, helps track payments and eases compliance management. Banks can provide more accurate information about the origin and destination of transactions. The result is better monitoring and analysis of payment transactions.

With the introduction of the IBAN requirement, companies and individuals may be challenged to adapt their existing payment processes and accounting and payment systems to make the IBAN the sole identifier. It is particularly important to clean up standing orders or data for recurring orders such as payroll. The “IBAN-only” system is based on automated processing. A temporary disruption or failure of the electronic infrastructure can interrupt payment transactions. It is therefore important to implement appropriate back-up measures. However, the advantages of mandatory IBAN far outweigh the disadvantages.

For Switzerland, too, IBAN-only is an important step toward improved, standardized national and cross-border payment processing with all the benefits mentioned. The QR Bill has once again accelerated the use of IBAN. Under the leadership of SIX, a team of experts from various Swiss banks is developing a proposal for the further procedure for the exclusive use of IBAN by the fall of 2023.

Stefan Schneider
“IBAN-only” taskforce member, PostFinance