The IBAN is slowly becoming the de facto standard of identifying a beneficiary account. Barring the US, many countries are now jumping on-board the IBAN bandwagon.
At the time of writing this article, 82 countries are using IBAN. However, the one thing that I personally don’t like about IBANs is that they are bank specific.
Tomorrow if I change my bank account, my IBAN changes. Which means, I need to update a whole lot of payment systems and payers about the change.
If I am a freelancer or someone that regularly uses the internet to earn a living and I’ve provided by IBAN as a payout method, this can be particularly nasty, going everywhere and editing my IBAN details.
Here are two thoughts on IBANs.
NBFI Owned IBANs
Non-Banking Financial Institutions should be able to buy chunks of IBANs. If my company is a money service business/company, and I obtain a lot of IBANs, chances are that it has been issued by a bank, i.e. the bank own the IBANs and as a money services business, these IBANs are leased to me.
An MSB should be able to get their own IBANs, pretty much to like an internet service provider that used to get their own Class B or Class C internet addresses (remember those?).
So if say MSB “X” gets 50,000 IBANs, this is great. It would be something like (assuming MSB “X” is based out of Belgium), then the format would be like:
BEZZ XINC 1234 1234 1234 1234 12
After such a block is provided to them, the only thing MSB X needs to do is to find a bank to host these IBANs and map it to their accounts on the backend.
This way, the front-end never changes. It will always be MSB X’s numbering scheme, whilst at the back-end, one can choose any bank.
Just like a domain name, an individual or a business should be able to own an IBAN. This IBAN can be purchased from some organization that provides the mapping/hosting service as well.
So the IBAN becomes my identity, it could be something like (assuming it was issued out of Pakistan)
PKIB FKHA 12345 12345 12345 123 (just a sample numbering scheme)
Just like the domain, the ownership would always be mine. However, I would need to work with either licensed NBFI or an FI to host my IBAN and propagate it around the world, just like a DNS entry.
In fact, the IBAN could very well be associated with the TXT record of a domain name (how it would work, I don’t know – but its possible).
Anyways, this was just a thought I had regarding IBANs.