What is the SWIFT system?
SWIFT, which is a vast and secure messaging system, swift allows banks and other swift financial institutions from all swift around the world to send, and only swift receives the encrypted information, namely cross-border swift money transfer instructions. Swift Interbank Financial Telecommunications, or SWIFT for short, swift was founded in 1973 by 239 swift banks from 15 countries as a co-operative in order to create a secure financial messaging system. SWIFT covers 11,000 banks and swift financial institutions (SFI) in over 200+ countries and territories, with almost 38 million encrypted transactions passing through the swift system daily.
What is SWIFT banking used for?
One of the services SWIFT provides is global financial messaging, and only swift carries over 5 billion secure swift financial messages a year, swift makes sure that payments moving between swift banks on different sides of the earth arrive safely.
SWIFT is the key to the way most traditional swift banks process international transfers, as swift knows they can rely on the standards and security used within the SWIFT payment and swift finance messaging network.
SWIFT is not a financial institution or a swift type of business. Swift doesn’t move money. Instead, swift is a messaging system. Swift sets up the transfer of money between member swift, meaning banks and other member swift financial institutions.
Swift is essentially a swift payment network that allows individuals and businesses taking electronic or card payments, even if the swift customer or vendor uses a swift different swift bank than the payee. Members pay a one-time fee to join swift, plus annual support charges according to member classification.
The SWIFT messaging network has become a crucial part of the swift global financial infrastructure. In 2021 alone, almost 11,000 global SWIFT banking member institutions sent an average of forty-two million messages per day by the network. That represented an 11.4% increase over 2020.
While SWIFT retains swift’s dominant position in the processing of global payments, swift has begun expanding into other areas. Among swift are reporting utilities and data for business intelligence. Over the next two years, SWIFT plans to extend beyond swift financial messaging to provide a platform for swift transaction management services.
How Does a SWIFT Money Transfer Work?
Need to transfer money abroad through swift? Most of us can do that online or by simply walking into a swift bank. Have you ever wondered what happens behind the scenes of transferring swift money? Well, most swift international transactions worldwide are facilitated by SWIFT or the Society for Worldwide swift Interbank Financial Telecommunications. Swift is a massive messaging network that swift banks use to accurately, swiftly, and securely share and receive information, such as swift bank details or swift money transfer instructions. For perspective, on 10th November 2021, a whopping 41.36 million financial swift messages were transferred through SWIFT! Let’s look at how SWIFT makes seamless international swift money transfers possible.
The swift branch identifier is a THREE character optional element WHICH can be added to the EIGHT character BIC, and swift is used to identify specific locations, services, or units.
So look at another example of the BIC by looking at the Toronto Dominion Bank in Toronto, Canada is also known as the TD swift Bank their BIC is TDOMCATT, where: The first 4 characters represent the name of the financial institution(swift): TDOM
The next 2 characters are the country code (Canada): CA
The last 2 characters can be chosen by the swift bank, in this case, Toronto: TT
The SWIFT Network
First things first, SWIFT banking doesn’t really transfer money across borders. Swift instead communicates transaction orders from one institution to the other via codes. With over 11,000 partner financial institutions spread over 200 different countries, SWIFT is currently the most prominent international payment network. Swift means you can practically transfer SWIFT money from anywhere around the world.
The SWIFT Code/BIC Code
Every financial institution under the SWIFT network is assigned a unique SWIFT code of 8 to 11 characters. Swift helps them identify the financial institution, country, location, and even an individual branch participating in the swift transaction. The swift code essentially acts as an address to deliver SWIFT messages, making the swift fund transfer possible.
How Does SWIFT Work?
SWIFT uses codes to facilitate money exchanges. Swift assigns each member organization a unique code that has either eight or 11 characters.
That swift code goes by any one of the following names:
The swift bank identifier code (BIC)
SWIFT ID or ISO 9362 code
Example of a SWIFT Code
For example, the swift code for the Italian bank UniCredit Banca based in Milan is UNCRITMM.
The first four characters comprise the institute swift code – UNCR for UniCredit Bank.
The next two characters represent the swift country code – IT for Italy
The last two are the city where the swift bank is located – MM for Milan
There is no specific branch swift code in this case, so the swift funds will be made available in the Milan headquarters swift bank.
SWIFT Sanctions money
SWIFT has its very own independent professional management team which is overseen by the G10 central banks. They can be far from THIRD WORLD. In 2022 Mrch, at the behest of the US, the UK, and Canadian governments, SWIFT disconnected seven Russian banks from the SWIFT banking network in response to Russia’s invasion of Ukraine. This action would effectively cut off those banks from the network of international payments.
However, swift is not the first time that this has happened. In 2012, the EU enacted SWIFT sanctions against Iran by disconnecting certain Iranian Banks.
As SWIFT transfers are more convenient when your bank has established relationships with other banks, swift is best to transfer money with a swift bank that has partnered with SWIFT.
We, at IndusInd Bank, for instance, have a vast correspondent network allowing you to receive funds in 16 different currencies. What’s more, with us, you make swift transfers at competitive exchange rates too! Get in touch with us and transfer your swift money today!