What is a local IBAN and why does it matter for your business?

An IBAN, also known as an International Bank Account Number, is a tool that people and companies widely use to receive or send money to different countries. An IBAN format is an internationally agreed-upon format that consists of up to 34 letters and numbers, helping banks ensure that international payments are processed correctly.

Each set of characters represents a different detail of your account number, including country-specific specifics.

So, what are the pros and cons of a local International Bank Account Number, and does it really matter? Spoiler – it does, for some banks and clients at least, but for others, maybe not so much. Let’s figure it out in this article.

What is a local IBAN?

However, first, we should establish what a standard International Bank Account Number is. As we mentioned before, a bank account number IBAN consists of up to 34 letters and numbers. By the way, not every country supports IBAN – you should always check the full official list of IBAN-supporting countries.

Let’s take, for example, France and its country-specific account details format. France is a good example of using IBAN because it has specific international borders, such as its overseas territories.

In France, IBANs comprise only 27 digits, including the country code, check digits, bank code, bank branch code, national code, and bank account number. It would be something like this:

FR1420041010050500013M02606

To learn how it really works and what each number represents, you can check our detailed guide.

Banks, in order to proceed with money transactions from their clients, must see the recipient’s country code, check digits, a bank code that identifies the respective bank, a branch code where applicable, and the basic bank account number, which basically stands for what IBANs stand for.

All of these elements together form a unique identifier for a specific bank account within a specific financial institution.

When an IBAN is described as “local,” it means that the bank account is registered in the same country as your customer, client, or business partner. It has a big impact on how payments are processed.

Effectively, this means a transaction through a local IBAN number feels no different than sending money to any other domestic bank account – they do not face additional bank charges, and what is most important, they are allowed to use local payment systems without triggering SWIFT or SEPA fees and possible currency conversion at bigger exchange rate plus longer processing times.

This distinction between local and foreign accounts, despite using the same unique code and account number simultaneously, is what makes the local IBAN feature so valuable for businesses and very handy for many banks in any country.

Why do businesses need a local IBAN?

As we have already established, a local IBAN directly impacts payment processing – some banks, financial institutions, and payment providers are more likely to process a client’s payment successfully if the IBAN is recognized as local.

The reason for this is simple: they don’t need to consider any SWIFT codes or SEPA requirements for international transfers, or any country-specific fees or taxes. With a local IBAN, it’s straightforward.

It also works on the opposite side – having a local IBAN may reduce the chance of triggering certain cross-border reporting rules or correspondent bank fees.

For example, let’s take SEPA transactions – in the EU, they often arrive the same day. For a non-EU country, it may take slightly longer, and if you use SWIFT codes to make transfers, it can take up to several days.

The key differences: local IBAN vs. traditional IBAN

Let’s take a look at a side-by-side comparison of local and traditional IBAN number features.

Feature	Local IBAN	Traditional IBAN
Currencies available	Issued with the country’s own currency and, depending on the provider, may also support multi-currency accounts.	Depends on the issuing bank; many accounts also offer multi-currency options, but foreign currency payments may involve conversion.
Settlement time	Faster for domestic payments and often for regional schemes (e.g., SEPA Credit Transfer next day or SEPA Instant in seconds).	May have similar speeds within SEPA, but outside the region or currency zone, settlement often requires SWIFT and can take 1–3 business days.
Bank account location	IBAN’s country code matches the payer’s country, giving the appearance of a local account.	IBAN’s country code reflects the country where the account is actually held, which may be different from the payer’s country.
Compliance and regulatory aspects	Must comply with the regulations of the country where the account is held; local IBAN format can simplify acceptance under domestic clearing rules.	Must comply with the regulations of the account-holding country, even if the payer is based elsewhere.
Cost savings on fees	Can reduce FX and cross-border processing costs when used for payments in the matching currency via local payment rails.	Within SEPA, euro transfers are usually priced the same as domestic by law; outside SEPA or in other currencies, FX and cross-border fees are more likely.

We should also mention that sometimes the basic bank account number is confused with the local IBAN code, which is wrong – it is simply a part of the international bank account number IBAN which includes the domestic bank code, branch code, and account number.

Who uses local IBAN? 

E-commerce businesses selling goods in the EU – they receive money from customers through a specific local international bank account number.

Another case is payouts; many employers use a local IBAN number account to pay their workers.

SaaS or any service companies that bill in multiple currencies can provide payment options in EUR, GBP, or USD, all processed as local transactions.

Even global marketplace vendors receiving payouts from platforms can streamline their operations by using a local IBAN feature.

Benefits of having a local IBAN for international business

The first and most obvious benefit is improved payment processing, resulting in a positive customer experience.

By offering a local IBAN number, you remove the complexity and cost for clients from any country of the over 80 IBAN members.

You also lower your own expenses by avoiding unnecessary foreign exchange charges and high transaction fees.

From an operational perspective, a local international bank account number facilitates easier reconciliation and accounting. Payments arrive in the correct currency, with account details that match your invoices, which reduces errors in record-keeping. It also enables more efficient management of multi-currency accounts, allowing for the handling of payments from different countries through a single, streamlined banking setup.

Another major advantage is access to a local payment network. Instead of relying solely on SWIFT for international money transfers, you can tap into faster, cheaper systems like SEPA in Europe or BACS in the UK.

By the way, despite the United Kingdom no longer being an EU member country, it is part of the IBAN and SEPA systems, but it also has its own sort code. The sort code is primarily used in the UK and Ireland. It’s a 6-digit code (something like 12-34-56). It is effectively a bank identifier code plus a branch code where the bank account is held.

It works together with your account number to route payments domestically within the UK.

These local networks are designed for quick settlement and minimal cost, giving you a competitive edge in managing your transactions.

How Genome provides IBANs for businesses

Genome provides businesses (and personal users) with a dedicated Euro IBAN number that can be opened entirely online – no bank visits or lengthy paperwork required. As an electronic money institution licensed and supervised by the Bank of Lithuania, Genome ensures regulatory compliance and robust security. 

We offer Lithuanian IBANs, but they are universal when it comes to their usage for SEPA payments!

Once you open a wallet inside Genome, you get a dedicated EUR IBAN account automatically – perfect for sending and receiving SEPA Instant and Credit Transfers. 

One standout benefit is Genome’s multi-currency capability. In addition to EUR, you can add and manage accounts in various currencies – USD, GBP, PLN, CHF, JPY, CAD, CZK, HUF, SEK, AUD, and DKK – with seamless currency transfers from one account to another. Store funds and unlock international money transfers for your company. 

Genome offers both virtual and physical Visa debit cards for personal and business use, both of which are contactless (Google Pay, Apple Pay, Garmin Pay-compatible). 

Virtual cards can be issued instantly through your Genome dashboard and are perfect for online purchases, subscriptions, advertising platforms, and secure money transactions. 

Physical cards are ideal for everyday spending, travel, and in-store purchases. They work worldwide wherever Visa is accepted.

Need an International Bank Account Number for your business or personal needs? Look no further – start the onboarding at Genome online with minimal documents required.