Sending funds to the wrong IBAN means money bouncing back, or worse, going to the wrong recipient (or a fraudster!). Since wire transfers are usually irreversible, it’s paramount to check the validity of your credentials before sending payments. That’s what an IBAN validator does.
But simply checking that your recipient’s bank account is valid isn’t enough, especially if you want to prevent wire transfer fraud.
Trustpair automates your account validation process by validating your IBAN, but also protects you from fraud. It’s an IBAN validator solution that’s more scalable and secure. Request a demo to learn more!
What’s an IBAN validator and why is it not enough?
What do IBAN checkers do?
An IBAN validator (or iban checker) is an online tool that checks the validity of a bank account number. It’s used by individuals and businesses alike to check the IBAN they have is of the right format.
For instance, they check that you have the right amount of digits and characters for the country it links back to. Or that the countrycode matches the following digits.
A free IBAN validator tool simply checks the format of your IBAN against the default format of IBANs, based on the country. It checks the length and the overall format, but it doesn’t go much further. Which is one of the problems with these tools.
IBAN validators aren’t enough for companies
The problem is that IBAN validators only check the format of IBANs, not their validity. They don’t check:
- That the bank account actually exists or
- Who the recipient is.
Even using the best-in-class tool might validate a null IBAN, resulting in a return of funds.
This process also leaves a huge security gap in your account validation process. If you use free IBAN validators to check your supplier’s credentials, it exposes you to wire transfer scams.
Wire transfer fraud takes various forms:
- Vendor fraud: fraudsters impersonate your suppliers to get you to send them unauthorized funds.
- CEO fraud: scammers pretend to be your CEO to ask you to wire funds.
- Internal fraud: employees approve payments for fake or illegitimate invoices.
None of these frauds can be prevented by checking IBAN.
An anti-fraud solution like Trustpair protects you against financial fraud by doing 3-way matching. When checking IBAN, we check:
- The bank account digits are correct and the account is valid.
- The account belongs to someone.
- Both pieces of information match.
IBAN validators also aren’t efficient. If you want to check several bank numbers internationally, you’ll have to do it manually one by one. It’s OK if it’s an occasional task, but not if you’re a company that deals with various international suppliers.
In this case, it’s more efficient — and secure — to use a first class solution like Trustpair. Our solution detects IBAN mistakes but also fraudulent attempts, supporting your anti-fraud strategy.
What are the main mistakes that can make IBANs wrong?
IBAN mistakes are quite common: default IBAN numbers are a long string of singleton and grouped digits. It’s common to make a typing mistake that result in a null IBAN.
In the best scenarios, your funds will simply bounce back, which is pretty harmless even though your banks might charge you for it.
In the worst-case scenarios, however, you’ll never be able to get your funds back — wire transfers are almost impossible to reverse.
Here are the common mistakes that make IBANs wrong:
- Typos: manually inputting your recipient’s IBAN number leads to mistakes. A finger slips, or you get confused because default IBANs are a succession of singleton digits that aren’t easily read.
- Format: a few characters are missing — or there are extra ones! There can be some confusion with the BIC number too. Note that different countries have different IBAN classes.
- Owner details: sometimes financial institutions ask for your recipient’s details, like their complete name and address. If you don’t have them, or they’re not the ones the bank has on record, the funds will return to you.
Ultimately, even using the best-in-class validator means resorting to a manual process, which is time consuming and inefficient for companies (and tend to nullify their anti-fraud efforts).
When it comes to validating your IBAN and securing your supplier’s credentials, an anti-fraud tool like Trustpair is what provides real support.
What’s the right format and structure of an IBAN?
Default formats for IBAN vary in length and structure depending on the bank’s country of domicile. There are a lot of variable that comes into play, so it’s impossible to lay them all out.
Here’s the default format for IBAN:
- Countrycode
- Check digits
- Bank code
- Branch code
- Bank account numbers.
How can you find someone’s IBAN?
If you know the elements that constitute the IBAN (country code, bank code, bank codes — like above), then you can create the IBAN out of this information. It’s safer to find the IBAN directly though, as it limits the risk of mistakes.
If you’re looking for someone’s IBAN, the best way is to simply ask them. They’ll find their international bank account numbers on bank statements or in their online bank app. They could also contact their banks.
In B2B settings, vendors will give their number IBAN to you:
- On their invoice,
- By email or over the phone,
- In your vendor contract.
It’s important to make sure the IBAN is correct, but that it also belongs to the right beneficiary. Fraudsters can easily impersonate suppliers and send you their “new IBAN” by email. Without knowing it, you’ll be paying scammers instead of your real suppliers. Continuous and automated IBAN checks through Trustpair are what make your life easier and protect your company against fraud.
To learn more about the risks of payment fraud, download our latest fraud study!
Key Takeaways:
IBAN validators help you check the format of the IBAN. However, they don’t guarantee the existence or the ownership of the bank account, leaving you at risk of financial fraud.
Anti-fraud software like Trustpair makes checking IBAN more efficient and more secure too. Our software automatically checks your supplier’s IBAN before every transaction.
