IBAN is indispensable

The transitional period during which bank customers could still use the traditional account number and bank sort code has come to an end. As Bundesbank Executive Board Member Carl-Ludwig Thiele has explained, "Effective 1 February 2016, credit transfers will no longer be processed unless they bear an IBAN".

Thanks to the Single Euro Payments Area, known as SEPA, remittances between various European countries have been made a lot simpler and cheaper. Specifically, this was achieved by introducing the international bank account number (IBAN). Businesses, public authorities and associations already switched to the SEPA format on 1 August 2014.

We will all need to adapt

Up to now, users have had the option of choosing between an IBAN or the traditional combination of account number plus bank sort code when completing a domestic credit transfer. This concession has now been taken away. Hitherto, credit institutions have been allowed to offer customers the facility of converting their old bank details into the new IBAN. According to Mr Thiele, a small minority of users still clinged to the old procedure and therefore take advantage of this service. This will no longer be permitted, hence his request to this group of customers to make sure they are informed about IBAN.

Log-in procedure stays the same

When logging into online banking services, customers need not change their behaviour. As a rule, users log into their bank's website by entering their account number and a PIN. However, this is solely in order to identify themselves and in no way constitutes a payment instruction. The expiry of the transitional provision will therefore not affect the log-in procedure. But matters will change as of 1 February 2016 when, for instance, a grandparent wishes to send money to a grandchild as it will then be necessary to specify the relevant IBAN. On the other hand, customers' pre-existing standing orders will not be affected by the ending of the transitional arrangement as banks will have already converted these into the new format.

Luckily, it's easier to remember your IBAN than you might at first think. In Germany, each IBAN is made up of 22 digits. This long number is based on a simple principle. The first four digits comprise the German country code DE plus a check digit. The next eight fields are reserved for the user's old bank sort code. Finally, a further ten digits are taken up by the old account number. If the latter is too short then any blank spaces must be completed with zeroes, starting at the beginning of the line, until 22 digits have been entered. Anyone wondering where to find their IBAN will find it on their account statement or, in most cases, printed on the back of their girocard (formerly referred to as EC card). Being a dauntingly long number, it is easier to read and write down if split up into blocks of four digits, each interspersed with a blank space.