Frequently Asked Questions about IBAN in Saudi Arabia
Saudi IBAN – FAQ
1. Question: What is an IBAN?Answer: IBAN stands for International Bank Account Number. It is the ISO 13616 international standard for bank account numbers. The IBAN facilitates the communication and processing of payment transactions. It allows for the exchanging of customer account identification in a machine-readable form.
The IBAN has a fixed length per country and consists of a two letter Country Code, followed by two digits used for checking the validity of the account number (known as 'Check Digits') and up to 30 alphanumeric characters for a Basic Bank Account Number (BBAN). Included within the BBAN is a Bank Identifier, with a fixed position and a fixed length per country.
2. Question: What is a BBAN?Answer: BBAN is a basic bank account number that uniquely identifies an individual account at a specific financial institution and that includes a bank identifier of the financial institution servicing that account.
3. Question: What is the purpose of the IBAN?Answer: The IBAN facilitates the Straight-Through-Processing (STP) of payments between banks by enabling the correct identification of a Beneficiary's bank account.
The IBAN provides the facility for the Sending Bank and/or the Remitter to perform a validity check of the Beneficiary's account number at another bank.
4. Question: Why is the IBAN being introduced in Saudi Arabia?Answer: The Saudi commercial banks are anxious to maximise the levels of fully automated processing of payment messages. The STP levels being achieved in Inward Customer Payments is lower than might be expected. The absence of a common account numbering standard across all commercial banks has been identified as the primary cause for these lower than desired STP rates.
The present account numbering structure in use in the Kingdom was originally introduced to cater for check clearing. Individual banks were permitted to choose their account numbering systems based on their own business and technical requirements. Account numbers in use today range from 7 to 18 digits with banks having their own structures and formulae. The present structure continues to work well for check clearings. However, it is a significant contributor to the less than satisfactory STP levels for Inward SARIE and SWIFT payments.
This absence of a standard account numbering structure makes it virtually impossible for one bank to know whether the number of an account held at another bank is valid. When a bank receives a payment that contains an invalid account number, they cannot automatically process that payment. Such payments require costly and time-consuming manual intervention. In some cases payments received with invalid account numbers are returned to the sending bank.
IBAN provides banks with a mechanism for introducing a common account numbering standard while retaining their customers' basic bank account numbers.
5. Question: Does the IBAN replace existing customer account numbers?Answer: No, the IBAN does not replace existing account numbers. It is important to remember that the IBAN is not a new account number, but simply a new format for an existing account number.
6. Question: Where can the IBAN be used?Answer: The IBAN can be used in SARIE Customer Payments and in International Payments received via SWIFT.
7. Question: Can the IBAN be used for international payments sent to Saudi banks or is it just for domestic payments within the Kingdom?Answer: Yes, Banks should encourage their customers to quote their account numbers in IBAN format on all Invoices and Requests for Payment both within the Kingdom and internationally.
SAMA will register the IBAN format for KSA with SWIFT, the international registration body for IBAN. SWIFT will then publish the KSA IBAN format in the IBAN Registry which is available to all banks worldwide.
8. Question: Who issues the IBAN?Answer: Only the Account Holding Bank is authorised to create and issue IBANs. No other party is permitted to create an IBAN.
If the IBAN, (in particular the "check digits") is created with an incorrect account number, then any subsequent validation will not identify the error.
9. Question: Will the customer, or the bank, be charged more for using IBAN?Answer: There will be no change to the SARIE Charging Policy as a result of the introduction of IBANs
There is no difference in SWIFT message charges between payments with or without an IBAN.
Banks must not charge any fee to customers for the generation or distribution of IBANs.
10. Question: Will Saudi Banks be able to receive payments from abroad with an IBAN?Answer: Yes, Banks should encourage their customers to quote their account numbers in IBAN format on all Invoices and Requests for Payment both within the Kingdom and internationally.
SAMA will register the IBAN format for KSA with SWIFT, the international registration body for IBAN. SWIFT will then publish the Saudi IBAN format in the IBAN Registry, which is available to all banks worldwide.
11. Question: Will Saudi Banks be able to send International payments using an IBAN?Answer: Yes, to ensure faster processing of incoming payments by banks in most European countries the ‘BIC and IBAN’ should be quoted on payment messages sent via SWIFT. The BIC or Bank Identifier Code is also known as the SWIFT address. The ‘BIC and IBAN’ is now quoted by a large number of European customers on their Invoices and Requests for Payment.
A number of Saudi banks are already using the ‘BIC and IBAN’ for payments sent to European banks.
Copyright © 2008-2009 sarie.gov.sa, Saudi Arabian Monetary Agency (SAMA) All rights reserved.
