SEPA UK – why multi-level validation of bank account data matters

With SEPA coming to the UK for Euro payments we take a look at why it is necessary to validate information at both the IBAN (International Bank Account Number) and BBAN (Basic Bank Account Number) levels.

An IBAN is not a new account number, but simply a new format for existing bank account data that is recognised internationally.

The process used by many online IBAN checkers validates IBANs in accordance with SEPA using the following process:

  • Checks the 2-character ISO country code
  • Checks for conformance with the country-specific IBAN layout
  • Verifies the MOD 97 checksum

This level of checking validates the “envelope” and structure of the IBAN, rather than validating the content of the IBAN, such as the formation of the account number specific to the issuing bank.

To be sure of the validity of an IBAN an additional check that de-constructs the IBAN into its BBAN (Basic Bank Account Number) components to validate them separately is necessary,

In this example, we have generated an IBAN using false information:

GB92 EXPN 1234 5678 9012 34

Many online IBAN Checkers would return a ‘validated’ result for this IBAN – it is however invalid.

It is purely the envelope that has been checked, meaning that errors are still possible. In the event of a bank receiving an erroneous IBAN, the receiving bank can reject the payment, and levy penalty fees.

Error like this can occur, for example, when the sort code component of the IBAN becomes invalid, this happens with events such as the closure of a bank branch. Such an IBAN will appear to be valid and it is only checking at BBAN level that will expose the error and avoid a payment rejection.

Fortunately there are solutions that can validate at multiple levels to ensure that you are only transacting with valid bank account data and thereby minimising the risk and associated costs of using invalid bank account data. To trial Bank Wizard our solution for validating bank account data for UK and international bank accounts.