A Comprehensive Guide to the SWIFT Network

July 21, 2022

Guide to the SWIFT Network

The SWIFT network is one of the most popular options out there for banks and financial firms that need to make international transfers. In this article, we’ll take a closer look at SWIFT and how it works, so you’ll know exactly what’s in store for you the next time you use it.

What is the SWIFT Network?

The Society for Worldwide Interbank Financial Telecommunication, otherwise known as SWIFT, is an international messaging system that operates over a nexus of banks and other financial institutions. Thousands of banks all over the world use this member-owned network to securely transmit data on monetary transactions. 

SWIFT was founded in 1973 in Brussels, Belgium, and provided banks with a much more efficient alternative international transaction system than the previously used TELEX. Where TELEX described transactions with full sentences, SWIFT uses codes instead, streamlining the transfer process.

In the years since its founding, SWIFT has established itself as an essential part of the international financial infrastructure. Now, it is used by over 11,000 banks and other financial institutions in over 200 countries and regions.

How Exactly Does SWIFT Work?

The SWIFT network communicates monetary transactions between two financial institutions. This process looks slightly different depending on whether or not the banks have accounts with one another.

If they do, the transfer has completed the instant the recipient has received the SWIFT message. The money is then transferred via the commercial accounts, with the bank taking a small transaction fee.

However, if the banks do not have commercial accounts with each other, a third bank will become involved as an intermediary. This process is more expensive, as you are charged an extra fee.

How Long Do Transfers Take Through SWIFT?

Transfers through the SWIFT network are not instantaneous. Depending on factors such as transfer destination, time zones, and banking procedures, a transfer may take anywhere from 1-4 working days. Every transfer also has to pass various anti-money laundering and anti-fraud checks, adding to the time it takes for a transaction to go through.

If the two financial institutions involved do not have accounts with one another and require the assistance of an intermediary bank, this can also slow down the transaction process.

What Details Do You Need to Perform a SWIFT Transfer?

To make an international transaction using SWIFT, you first need to confirm a few details:

  1. The name of the recipient.
  2. The recipient’s home address.
  3. The name and address of the bank, institution, or corporation receiving the transaction.
  4. The bank’s SWIFT code, or BIC (Bank Identifier Code).
  5. The account number or IBAN (International Bank Account Number) of the recipient.

Where can you find a SWIFT code?

When making an international transfer, you will need the bank’s SWIFT code or BIC. This is not sensitive information, so it can easily be found with a quick online search. 

In some instances, a bank will list their BIC on your bank statements. However, if this is not the case, it can usually be found quite easily on your bank’s website.

Where can you find an IBAN?

Some banks include your IBAN on your bank statements. However, sometimes you will need to generate the number yourself. This can be done using either an online IBAN calculator or through an online banking application.

If your IBAN is not listed on your bank statement but you have concerns about generating it yourself, you can always seek out the advice of a money transfer specialist.

How Do SWIFT Transfers Work?

SWIFT network transfers can be summarized in four simple steps. In this section, we’ll explain each of these steps to you so that you understand the entire process.

Step 1: Identification verification

When sending money overseas, your identity first has to be verified by your bank. This is in compliance with international legislation on anti-fraud and anti-money laundering.

You may be required to provide your bank with some proof of ID for the identification check procedure. This may involve sending them a scan of your passport along with a bank statement or bill as proof of address. 

Step 2: Agree upon an exchange rate

The next step in the process is for you to agree on a currency exchange rate. When you are ready to make the transfer, you can receive an exchange rate quote from a bank or transfer company. 

Once you have decided that you are happy with the quoted rate, you can then move on to the next step in the process.

Step 3: Send funds to your bank

Before your funds can be converted and sent to the recipient, you must send the money to your bank or other transfer company. 

In the case of the former, you will have to send your money over before an exchange rate is confirmed. When using a money transfer company, however, you might be given the opportunity to agree upon and lock in an exchange rate before sending them your funds.

Step 4: Your funds are sent

At this point, your part in the process comes to an end. All you have to do is wait for the transfer to successfully go through. 

After your bank or transfer company has received your money, the funds will be converted to the appropriate currency at the agreed-upon rate. Then, the converted funds will be transferred to the payee using the SWIFT network.

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We offer tech solutions to allow your company to expand internationally, drawing in new customers and establishing a wide client base. With our platform, you can make international payments to countries all around the world with just a couple of clicks of a mouse.

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