ABA Validation Vs. IBAN Vs. SWIFT – What’s The Difference?

ABA Validation Vs. IBAN Vs. SWIFT - What’s The Difference?

If you are using standard financial institutions to transfer money domestically in the United States or internationally, you’ll come across different standards for bank codes. In this article, we’ll identify the key distinctions between ABA validation, IBAN, and SWIFT to help you gain a further understanding of the different financial identifiers around the globe.

ABA Validation: The Basics

When working with banks in the US, you’ll use an ABA routing number. The ABA routing number was developed by the American Bankers Association (ABA) in 1910. It’s a unique code used to identify the specific financial institution responsible for the payment of a negotiable instrument and is required along with your account number, bank name and recipient details to perform transfers of funds.

• An ABA routing number is 9 digits-long and composed of numbers only. It’s most commonly found in the bottom left-hand corner of checks or in a recent bank statement.

Over the years, the ABA routing number has evolved and now accommodates the Federal Reserve System, Magnetic Ink Character Recognition (MICR), and the Expedited Funds Availability Act (EFAA).

IBAN: The Basics

Outside the domestic U.S., there are other forms of identification for financial institutions. One of which is the International Bank Account Number (IBAN), which is used in many countries around the world. Similar to ABA validation, the IBAN is a code that contains information about the receiving country, bank, and branch. This code also includes your organization’s unique account number.

• The IBAN is up to 34 characters long and includes numbers and letters.

To learn more about IBAN validation, read our article on this topic here.

SWIFT/BIC Codes: The Basics

Another international financial institution identifier is the Bank Identifier Code (sometimes called SWIFT), which is also used in many countries around the world. This code contains information about the receiving country, bank, and branch. When using BIC, your organization will also have to include its unique account number.

• The BIC/SWIFT is either 8 or 11 digits long and includes numbers and letters.

Each bank has its own unique bank code and every country has an official two-letter ISO country code. Financial institutions also have unique location codes.

To learn more about BIC code validation, read our article on this topic.

Multinational Payroll: Managing Foreign Currencies

For organizations operating in multiple countries, payroll can start to get complicated – especially regarding the transfer of foreign currency.

We recommend teaming up with a third-party payroll provider, like Celergo, that can consolidate your global payroll and be your single funding source for paying employees, authorities, and third parties in multiple local currencies. This service is commonly referred to as treasury management and you can learn more in this post we put together a little while back. In addition to reducing the stress on your team, Celergo helps maintain strict compliance to Office of Foreign Asset Control (OFAC) regulations and other international requirements that affect global funds transfers.

If you have any questions regarding ABA validation, IBAN, or SWIFT and how these relate to 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.


Merger and Acquisition Tips – International MA Payroll Precautions From The Professionals
GDPR Data Retention Precautions for Multinational EU Employers