IBAN in Ukraine: what should you expect?
Since August 05, 2019 Ukraine brought into usage the International Bank Account Number - ІВАN. Three months were given for the transfer from the old format to the new one (until October 31, 2019).During this period, you can use both new details and old ones. But from November 1, everyone, without exception, will switch over to the new standard.
What is IBAN and what impact will this innovation have on your business?
What is an IBAN?
IBAN is an international bank account number, which is defined by ISO (International Organization for Standardization) and ECBS (European Committee for Banking Standards) No. 13616. Bank accounts are encoded in accordance with this standard in line with a unified system of international rules.
If previously the details included separately the MFO of the bank and the current account, now IBAN will consist of 29 characters, including numbers and letters.
The country code (UA) is indicated at the beginning, then the control number (two digits), the bank code and the bank account that you had under previous standards (if you already have a bank account). The account number can have from 5 up to 14 digits (until 10/31/19), and from 11/01/19 - from 5 up to 19 digits.
That is, now in the settlement documents there will be no line "Bank routing code", it will be possible to immediately locate the country and the bank of the account holder, which will save time when filling in the details.
What will change?
Since August 5, banks have already begun to set up accounts for clients in line with the new standard, but along with this, accounts that were set up before that will be transferred to a new format, keeping the number of the Client’s bank account.
And from November 1, all transfers of funds (both in national currency and in foreign ones) will be carried out only using the international IBAN code, while payment can be made using payment cards, which will continue to be valid.
Banks will also inform their Clients about a change in the standard of details, and Clients, in turn, are required to notify their counterparties in order to indicate the new number in the settlement documents.
What are the benefits of IBAN?
The introduction of an international standard for filling in details will facilitate the financial interaction of Ukraine and Europe, and also, in the future, will contribute to the development of an electronic payment system.
Also, the IBAN system can greatly facilitate the interaction of foreign companies with the Ukrainian ones.
Now it is possible to quickly and easily identify the payers / recipients of funds and the Ukrainian bank engaged in their servicing. In addition, the process of transferring and receiving funds will get faster.
Of course, any changes are frightening, but if you look into the matter in detail, all the innovations can be used to your benefit. If you need advice on this issue, our specialists are ready to provide it. Our company is always in the know about all the innovations, therefore, it carries out all its activities in accordance with the applicable law.
What is your opinion on this innovation?