ISO Country CodesAn Interconnected Business World… in Shorthand

Making Sense of ISO Country Codes (& Why You Should Care)

In the most basic sense, a code is meant to convey a lot of information in a small number of characters.

Take websites that end in “.ca,” for example. Only entities that are recognized as having a presence in Canada can register a domain with that suffix, so if you visit one of those URLs, you know that you’re on a site officially registered in Canada. That’s a very basic example of the use of an ISO country code.

ISO codes are used in a lot of contexts. They’re considered global evidence that a program, document, or data collection is officially connected to a specific country or region.

That may not seem like a big deal, but keep reading. I’m going to explain why these codes exist, the benefits and challenges of using them, and some ways merchants can best utilize the system to their advantage.

What Are ISO Country Codes?

ISO Country Code

[noun]/ī • es • ō • kən • trē • kōd/

ISO country codes are standardized two- or three-letter abbreviations developed by the International Organization for Standardization to represent countries and territories in international operations like banking and shipping.

There are nearly 250 countries and territories in the world (depending on who’s counting). Coordinating the exchange of information between different entities around the globe can get very complicated, very quickly. But, having a standardized way to identify the information’s point of origin can help keep things straight.

ISO country codes provide a consistent way to identify countries across international systems. For example, the United States is represented as “US” (or “USA,” depending on the format — more on this later).

While ISO codes can be handy for us mere mortals, they were specifically designed for data systems. Computers use them for things like cross-border banking, international shipping, government efficiency, and customs. Later, the codes were adapted for the internet, as part of standard domain names.

Who Assigns ISO Country Codes?

The International Organization for Standardization (ISO) is a global body formed in 1947 that develops and publishes a range of different international standards. It's based in Geneva, Switzerland, and consists of members from over 170 countries.

ISO country codes, specifically, come from a standard called ISO 3166, which was first published in 1974. ISO 3166 defines the standard international country recognition codes used around the world.

ISO 3166 is reviewed and updated periodically. As of November 2023, there are 5,046 codes, including country- and subdivision-level codes.

Common Use Case for ISO Country Codes

From a commerce perspective, the world is getting smaller all the time. The internet has opened up opportunities that would have seemed impossible 20 years ago. The more that it happens, though, the more we need some kind of universal language that businesses can use. One of the first steps toward this goal was the creation of ISO country codes. 

Countries use ISO codes on everything from passports to international shipping. And they’re used for one reason: to keep everyone on the same page. 

I’ll give you an example to help illustrate. Let’s say you want to ship a package to Germany. You put the recipient’s name, address, and home city on the box. But, what about the country? Should you put “Germany?” Or maybe “Deutschland?” Or do you put “Bundesrepublik Deutschland?”

When things are not standardized, there are lots of opportunities for mistakes. ISO country codes address this problem by defining “DE” as a universally accepted abbreviation for Germany in all languages.

ISO Country Code Formats

ISO nationality codes come in three formats: alpha-2 codes, alpha-3 codes, and numeric codes. Each has its own purpose.

ISO alpha-2 codes consist of two letters, and are commonly used for things like internet domains, payment cards, shipping labels. ISO alpha-3 codes are used when clearer, less ambiguous identification is needed; for example, sports organizations, international treaties, or academic research.

There are also three-digit numeric ISO country codes. These might get used when languages use different scripts; for example, the Latin alphabet versus Chinese characters.

Format	Example	Common Uses
ISO 3166 Alpha-2	US	Internet domains Payment cards Shipping labels Airline tickets Customs forms Car license plates VAT codes
ISO 3166 Alpha-3	USA	Sports organizations International treaties International statistics Academic research UN/IMF/World Bank data
ISO 3166 Numeric	840	Banking Standardizing customs forms Data processing

Challenges & Critiques of ISO Codes

ISO codes can be used globally, but that doesn’t mean they’re universal. Trying to get that many nations to agree on anything is a daunting task. Think about the last time some family member started talking politics over a holiday dinner. Multiply that by nearly 200 countries around the world, and you start to see the problem. 

Whether or not a country is — or wants to be — recognized by the ISO can completely depend on political bias and geopolitical pressures. The process isn’t exactly transparent, either, and there’s little consistency when it comes to defining regions. A couple of popular areas for commerce might not even be supported, making the code effectively useless for merchants in some localities.

The lack of universal usage of ISO country codes can lead to redundancy, too. Some of the major players in the game use conflicting codes, while others argue that having three different ISO codes per country is unnecessarily confusing.

And let’s be honest: ISO is a bureaucratic entity, so changes are going to come slowly, if at all. This lack of agility means that the ISO codes don’t always reflect the real world; regimes can rise and fall in the time it takes to get a bill passed.

How ISO Country Codes Impact Merchant Operations

Amazon, Stripe, and Shopify all rely on ISO 3166 codes for configuring things like shipping. ISO codes standardize addresses in cross-border commerce, reducing errors and delays. That’s just one example of how ISO codes affect merchant operations, though.

Merchants and merchant service providers rely on ISO codes for analytics, compliance, store setup, and more:

If you’ve built or maintain your own proprietary website, it’s comparatively easy to program in elements of ISO country codes. A simple dropdown list of countries is one suggestion.

Merchant Concerns Regarding ISO Country Codes

Codes can be integrated manually—but you’ll need to keep them updated to avoid issues like failed checkouts or payment errors.

The important thing to remember is that ISO data isn’t static. For instance, a country could change its name and be assigned a new code. Without the most current information, your system would likely reject a valid new country, or recognize a country that technically no longer exists.

Outdated codes can clash with APIs, shipping apps, or payment services. Old information can lead to shipping errors or checkout failures. Even worse, it can cause payment hiccups that keep you from getting paid.

None of that is a serious concern if you’re running on a selling platform like Shopify; they’ll keep you up-to-date automatically. If you’re using your own system, however, you can sync Python or JavaScript up with libraries that can keep your data current.

It’s good for merchants — especially ones who do business internationally — to understand how ISO country codes work, why they’re important, and the consequences of not using up-to-date resources. Happily, most modern systems are sophisticated enough to keep things running smoothly with little to no input from you.