When working in global payroll, a pertinent banking term to familiarize yourself with is BIC and SWIFT Code. What some may not realize is that the two terms are interchangeable. A SWIFT code is an international bank code that identifies particular banks worldwide. SWIFT is an acronym for the Society for Worldwide Interbank Financial Telecommunication. SWIFT is the ISO format for the Bank Identifier Code (BIC). If you are looking to send money internationally you will absolutely need the beneficiary’s BIC along with their unique account number and/or their IBAN.
The BIC Code consists of 8 or 11 alphanumeric characters. The first four characters are the Bank Code followed by a two character country code and completed by a two character location code. Each Bank has a unique bank code. Every country has an official two-letter ISO country code. Each bank also has a unique location code. The last three characters signify a branch code if one exists
-Bank Code: DEUT
-Country Code: NL
-Location Code: 2A
-Branch Code: SSS
If you do not have the BIC on file, you can look it up as long as you have the Bank Name and Address on record. There are online tools that assist with this. Such tools can also allow you to validate a code that a beneficiary has provided to ensure that it is accurate before you initiate the transaction.
Simply put, it is not enough. Most International Banks require an IBAN along with the BIC and account number detail. The IBAN is comprised of a maximum of 27 alphanumeric characters within Europe and a maximum of 34 characters outside of Europe. It includes a country code, two “check characters” used to detect errors, and then a final number that includes the bank account, branch identifier, and routing details. This encompasses all the information necessary to get a payment from one bank to another bank with no or minimal error. In many cases, the BIC is incorporated into the IBAN detail. However, there are times where the BIC is not built into the IBAN, in that case, the bank will request the BIC along with the IBAN. As a precautionary measure and for Business Continuity Purposes (BCP) purposes, one should always have the BIC, IBAN and Account Number on record.
For executing payroll across borders, BIC validation is essential in order to decrease errors, improve the efficiency of money transfers, and help ensure your employees are paid on time.
If you have any questions regarding the validation of BIC for your employee payments, please contact us. We have an amazing, full-service treasury management team at Celergo. We are here to help, so please contact us!
**This article is for informational purposes only. It is not intended to constitute legal advice.