IBAN (International Bank Account Number) is a standard used to identify bank accounts in cross-border payments and financial transactions. For businesses that trade internationally, understanding IBANs is essential for correct handling of bank transactions and international payments .
The IBAN provides a standardised way to identify bank accounts across borders and is indispensable for correct bookkeeping of international transactions and compliance with accounting requirements.
What is an IBAN?
IBAN stands for International Bank Account Number and is an international standard (ISO 13616) developed to simplify and standardise international payments. It is a unique identifier that ensures international payments reach the correct bank account and recipient.
Structure of an IBAN
An IBAN can contain up to 34 characters and is built as follows:
| Position | Length | Description | Norwegian example |
|---|---|---|---|
| 1-2 | 2 characters | Country code – ISO 3166-1 alpha-2 | NO |
| 3-4 | 2 digits | Check digits – for validation | 93 |
| 5-8 | 4 digits | Bank code – identifies the bank | 8601 |
| 9-15 | 7 digits | Account number – identifies the account | 1117947 |
Norwegian IBANs
Norway uses 15-character IBANs that follow a fixed pattern. Examples:
| Bank | Bank code | Example IBAN | Notes |
|---|---|---|---|
| DNB | 8601 | NO93 8601 1117 947 | DNB Bank ASA |
| Nordea | 2000 | NO53 2000 1234 567 | Nordea Bank Norge ASA |
| Sparebank 1 | 4762 | NO76 4762 1234 567 | Sparebank 1 SR-Bank |
| Handelsbanken | 6705 | NO12 6705 1234 567 | Svenska Handelsbanken |
The role of IBAN in international payments
IBAN ensures that international payments are routed to the correct account. Together with BIC/SWIFT (which identifies the bank), the IBAN forms a complete address for cross-border transfers. Without a correct IBAN, payments can be delayed, rejected or incur extra fees.
Key points:
- IBAN is mandatory for most cross-border payments within Europe (SEPA and beyond).
- Always include both IBAN and BIC/SWIFT when sending or receiving international payments.
- For Norwegian accounts, the IBAN always starts with “NO” and has 15 characters.
How the check digits are calculated (Modulo 97)
The check digits (positions 3-4) are calculated with the Modulo 97 algorithm. They prevent typing errors and ensure the IBAN is structurally valid.
Calculation steps (simplified):
- Move the first four characters to the end (country code + check digits).
- Replace letters with numbers (A=10, B=11, …, Z=35).
- Compute the remainder when the resulting number is divided by 97.
- A valid IBAN gives remainder 1.
IBAN vs. account number vs. BIC
- Domestic account number: 11 digits in Norway. Used for domestic transfers.
- IBAN: Country code + check digits + bank code + account number. Used for international transfers and required in SEPA.
- BIC/SWIFT: Identifies the bank globally (e.g., DNBANOKKXXX). Used with IBAN for cross-border payments.
How to find your Norwegian IBAN
- Use your bank’s online banking to view the IBAN for each account.
- Convert from your 11-digit account number using a secure IBAN calculator (check digits are critical).
- Verify with Modulo 97 to ensure validity before sending.
Best practices for businesses
- Store customer and supplier IBANs in your accounting system to avoid re-typing.
- Validate IBANs at entry to prevent failed payments.
- Always include IBAN and BIC on invoices intended for international customers.
- Keep bank master data up to date so payment files (ISO 20022) remain valid.
Summary
IBAN is a standardised way to identify bank accounts across borders. Norwegian IBANs are 15 characters long and consist of a country code, check digits, bank code and account number. Correct use of IBAN (together with BIC) reduces payment errors, speeds up settlements and ensures compliance in international transactions.