What is an IBAN and why does every European account have one?
IBAN is the identifier banks across Europe use to pin a specific account down. Once you understand how it is constructed, you can read it like a code: country, bank, branch, account.
IBAN stands for International Bank Account Number. It is the standardised string that uniquely identifies a bank account across borders in Europe (and increasingly beyond). Any time you receive a salary, pay rent, or get a refund in the EU, your IBAN is the address the money is being sent to.
How it is built
An IBAN is 15 to 34 characters long depending on country. The first two letters are the ISO country code (NL for Netherlands, DE for Germany, FR for France, etc.). The next two digits are a checksum — a mathematical sanity check that catches most typos before the transfer is even submitted. After that comes the bank identifier (usually 4 characters) and the local account number.
Why the checksum matters
Before IBAN, mistyped account numbers meant money went to the wrong person and often could not be recovered. The checksum catches around 99% of single-character typos at the sender's bank. When you enter an IBAN into a transfer form and get an immediate "invalid IBAN" error, that is the checksum doing its job.
Virtual IBANs
Modern neo-banks assign each customer a dedicated IBAN that works like any traditional bank account — your employer can pay you, your landlord can pull rent, and friends can send money. The underlying technology is the same: your bank's partner holds the pooled funds, and the virtual IBAN is a bookkeeping identifier that routes incoming money to your specific sub-account.
BIC and SWIFT codes
You will sometimes see a BIC (Bank Identifier Code, also called SWIFT code) requested alongside the IBAN. Inside SEPA the BIC is usually optional — the first four characters of the IBAN after the country code identify the bank. Outside SEPA, you need both.
Rule of thumb: give out your full IBAN freely. It cannot be used to withdraw money, only to send money to you.