SWIFT system explained: How international money transfers work

Though there are cheaper and faster ways to carry out overseas financial transactions, the SWIFT system is a secure and reliable way to send or receive large amounts through banks worldwide.

What is SWIFT?

To facilitate overseas transactions in a manner that money reaches the correct destination, a system called SWIFT (Society for Worldwide Interbank Financial Telecommunication) is in place. It is essentially a global messaging network that allows banks and nancial lenders to carry out transactions in a standardised, secure and seamless manner across countries. Founded in 1973 in Belgium and operational since 1977, the SWIFT system currently has 11,500+ banks and nancial institutions as its members across 220+ countries.

What is SWIFT or BIC code?

Much like the IFSC code for domestic transactions, the SWIFT or bank/ business identi er code (BIC) is a unique code assigned to a bank or a nancial institution to help identify it while making international money transfers. The code comprises 8-11 characters, with the rst four representing the bank code, the next two identifying the country code, the next two indicating the location code, and the last three, if these are provided, identifying the speci c branch. You can locate the SWIFT code on the bank’s website, bank statement, through customer care support, or online services and directories, such as the BIC directory on the SWIFT website.


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How does SWIFT system work?

Sending money overseas via SWIFT can take 1-5 business days. Here are the steps to follow:

Step 1: Initiation

At your bank branch or portal, you need to fill up the SWIFT transfer form by providing the recipient’s international bank account number, SWIFT/BIC code, amount, currency, and any other information sought by the bank.

Step 2: Compliance

The bank conducts the know your customer (KYC) veri cation, anti-money laundering screening, and other checks to rule out any illegal money transfer.

Step 3: Transmission

The bank creates and sends a SWIFT message through its network with detailed transfer instructions to the recipient’s bank or nancial institution.

Step 4: Settlement

At this stage the actual money transfer takes place, with the money deducted from your account and credited to the recipient’s account.

How much does it cost?

Depending on the amount, bank and destination, fees are charged by the sending, receiving and intermediate banks, besides the currency conversion mark-up that you need to pay.