Globalization is increasing daily, meaning cross-border transactions are more important than ever. The most common way to send money abroad is through a SWIFT transfer. But what exactly is it, and how does it work? This article will show you.
What Is SWIFT?
It is an abbreviation for Society for Worldwide Interbank Financial Telecommunications, the standard messaging system that most banks use to exchange instructions with each other.
Whenever you send money via the network, your banking institution instructs the receiving bank to deposit money into the recipient’s account. Sometimes, the transfer must go through several intermediary banks before getting to the final recipient.
Each banking institution is identified by its SWIFT code, similar to how everyone has their unique phone number. This number is what banks use to identify themselves and send instructions on the network.
How Does A SWIFT Code Look Like?
It consists of 8 to 11 characters in four groups:
- The first four letters identify the banking institution
- The next two letters identify the country
- The next two identify the bank’s location
- The last three digits specify the receiving banking branch (this is optional)
The full number takes this format: AAAABBCCXXX.
Example
BOFAUS3N is a good example.
- BOFA signifies Bank of America
- US signifies the United States of America
- 3N is the bank’s code.
This example does not have the last three digits because all Bank of America branches share the same number.
Why Do You Need SWIFT Code?
It is necessary if you want to transfer money via the proprietary network. It is how your financial institution will identify the recipient’s institution and send instructions to them. Without this number, banks won’t communicate with each other, and your transfer won’t go through.
Is the Code the Same For All Bank Branches?
In many banks, all branches share the code of the head office, so you should not have issues transferring to any branch. However, you may need other identification for the specific branch, such as a sort code.
Where Can You Find A Bank’s Code?
- Website: Most banks display the code for all their branches on their official website. This makes it easy for customers to identify their branch when they want to receive money.
- Contact Customer Support: You can phone your financial institution or email them to get the number for your branch.
- Bank Statement: If you have requested a bank statement from your branch, you’ll likely find the number there.
Do All Banks Have the Code?
There’s no law requiring all financial institutions to have a SWIFT number. For instance, banks that do not facilitate international transfers won’t have it. But virtually all banks that allow foreign transfers will have it because SWIFT is the most popular financial messaging network.
Is SWIFT the Only International Payments Network?
No, there are several others, such as SEPA, SPFS, and CIPS.
- SEPA stands for Single Euro Payments Area. This network serves all countries in the Eurozone and is faster for transfers between supported countries.
- SPFS stands for System for Transfer of Financial Messages, an alternative developed by the Central Bank of Russia for ruble-denominated payments.
- CIPS stands for Cross-Border Interbank Payment System, an alternative network developed by the People’s Bank of China for cross-border yuan transfers.
Yet SWIFT remains the popular financial messaging network. Unlike most alternatives limited to specific areas and currencies, it supports many currencies and works globally.
Conclusion
We have provided a detailed answer to a common question: What Is SWIFT code? At this point, you should understand how it works to facilitate international trade.
Making a SWIFT transfer is not difficult; you just need to have the valid details of the recipient’s banking institution and initiate a transfer from your own institution. SWIFT payments usually take between 1 and 4 working days to settle.