In Australia, BSB codes are allocated by the Australian Payments Network (AusPayNet).
Financial institutions are required to include BSB and bank account numbers on cheques, at the bottom of the cheque in MICR form, which identify the specific bank account number to be debited.
Electronic fund transfers (EFT) are the most common method of non-cash payment in Australia.
EFT transactions between bank accounts use the Direct Entry system or the New Payments Platform (NPP).
Any process towards IBAN would involve considerable changes to bank software and computer systems, and the requirement for financial institutions to adopt defined length account numbers.
[citation needed] Following the introduction in the United Kingdom in the 1960s of a "sort code", a comparable BSB identifier system was introduced in Australia in the early 1970s to streamline cheque clearance through the banking system in Australia.
Other financial institutions had to use banks as intermediaries to access the clearance of their "payment orders", which were the non-banking equivalents of cheques.
While banks generally still follow the traditional state branch structure, building societies and credit unions often do not.
In these situations, the building society or credit union is identified by the 'state' and 'branch' components of the BSB whereas the 'bank' refers to the intermediary.
Furthermore, recent changes in Australia's financial system have allowed larger building societies and credit unions to establish their own BSBs, even if they are using an intermediary.
Having their own BSB allows a financial institution to create new products and offer additional services.