SWIFT (Society for Worldwide Interbank Financial Telecommunication) is an international messaging network used by banks and other financial institutions to securely transmit information and instructions.
Have you ever wondered how money is transferred between different banks and countries? The answer lies in a global messaging network called SWIFT, founded in 1973, which stands for the Society for Worldwide Interbank Financial Telecommunication. Although SWIFT doesn’t transmit money, SWIFT communicates transactions between different institutions to transfer money between them.
Before SWIFT, banks used TELEX for the same purpose. TELEX was a much slower payment system. Under TELEX, each transaction was described by sentences instead of codes. Today, SWIFT covers transactions in over 212 countries.
SWIFT is not governed by a single country. Instead, it is a cooperative with a 25-person board of directors that is overseen by the G10 central banks.
It is an international messaging network used by banks and other financial institutions to securely transmit information and instructions. It is used to exchange messages related to payments, securities, treasury, and trade.
The standardized IBAN (International Bank Account Number) and BIC (Bank Identifier Code) formats originate from SWIFT. SWIFT also assigns each financial institution with a unique identifier code. The United States, however, uses the ABA routing numbers for domestic payments instead and SWIFT codes for international payments.
When two banks have a commercial partnership, the transfer of funds from one personal account to another is conducted once the SWIFT message is received. The banks involved charge a fee for this service.
If the two banks do If the process does not involve a relationship, an intermediary bank will act as a go-between, for which an extra fee will be charged. When two currencies are associated with the transfer, one of the financial institutions will carry out the conversion of money.
There are many benefits to using SWIFT, such as:
SWIFT has become an essential part of the global financial system, providing an efficient and secure way to transfer funds across borders. It has become the de facto standard for international payments, providing a secure and reliable platform for banks and other financial institutions to communicate and exchange information. SWIFT is a powerful tool for global financial institutions, enabling them to conduct business more efficiently and securely.
