Getting Your Money To The Right Place

Every person and every business entity needs a way to be identified. On a personal level, most countries have a National Identification Number for each citizen of that country. In the United States, this number is a person’s Social Security Number. Although it is not used to the same extent as the Social Security Number, in the United Kingdom, citizens are assigned a National Insurance Number which is used to regulate and track state benefits.

Just as individuals need identification numbers, businesses also need identification numbers. In the United States banking industry, a bank is identified by a nine-digit routing number. However, in the United Kingdom, each bank is identified by a six digit sorting code. These numbers help ensure that monies and payments are credited to the correct accounts.

Sort codes came into existence in the 1960s. Before sort codes, national codes were used. National codes could be anything from three to five numbers in length. However, with the growing need for automation, speed and accuracy, the six digit numbers – sort codes – were introduced.

It is important to understand that these numbers are not randomly assigned. Each digit or set of digits within the number carries a meaning. Knowing the meaning of these numbers will help a person understand which bank money is being transferred to or from, the general location of the bank, and the specific branch of that bank.

The format for UK sorting codes are as follows: XX-XX-XX, six digits arranged in three pairs. The first two digits identify a particular bank. For example, Barclays is represented by the number 20; Lloyds first two digits are 30. So by looking at the first pair of digits, one knows which bank is involved in a particular transaction. The other two pairs of digits are used internally by the bank. The middle two digits indicate the location code, and the final two digits indicate the specific branch where an account is held. It can be thought of as an address for a specific bank; it contains information about the specific bank in question, which would be equivalent to an individual’s name on a letter. The location, which would be similar to a particular street name, and the house number indicating a specific residence would be represented by the branch number.

Sort codes are used in the United Kingdom to transfer funds between banks within the United Kingdom. For transferring between banks on an international basis, other numbers are needed: an IBAN (International Bank Account Number) or BIC (Bank Identifier Code). Just like sort codes within the United Kingdom, the IBAN or BIC is a specific address for a specific account in a particular bank within a country. When transferring monies between accounts, the accuracy of numbers such as the IBAN or sort code can make all the difference in getting the money to the right place.