Sending money to a family or friend overseas is made easy thanks to the introduction of systems like the SWIFT transfer. The SWIFT transfer, aka international money transfer, is a safe and standardized method of sending or receiving money from banks anywhere in the world. To use the SWIFT transfer, you’ll need to know how it works, including the documents required to initiate a transfer. In addition, you’ll need to know how long the transfer takes.
The time taken for a SWIFT transfer varies based on the recipient’s destination, time zone, and different banking processes. Typically a SWIFT transfer takes between 1 to 5 working days.
Like wire transfer, SWIFT transfer can be used to send money abroad through a secure network in any currency of your choice. SWIFT transfers don’t occur instantly. So, before you consider using this method to send money to a loved one, you may want to know the timeframe or how long it’ll take for the money to reach the recipient. Lucky for you, I have covered that in this article.
How Long Does a Swift Transfer Take?
With a SWIFT transfer, you can initiate a transaction in any currency of your choice and to any financial institution in the world. But, its implementation takes longer than the typical online transfer (on average, about 3 days).
It is not often possible to determine the cost of a transfer in advance since it depends on factors like how many banks will act as an intermediary in a particular transaction. And most importantly, SWIFT doesn’t solve the issue of small transfers.
Do you want to send money abroad? Today, it is easy to visit a bank and send money to Italy, Germany, France, Portugal, or anywhere around the world. But how does this happen? We have SWIFT to thank for that.
SWIFT system is large messaging network banks and other financial institutions use to quickly, accurately, and securely send and receive information, like money transfer instructions. Over 11,000 global SWIFT member institutions sent an average of 42 million messages each day via the network in 2021, increasing 11.4% over 2020.
Who Uses SWIFT?
Initially, SWIFT pioneers designed the network to facilitate communication regarding Treasury and correspondent transactions alone. The vastness of the message format design allowed for big scalability via which SWIFT slowly widened to provide services to the following:
- Banks
- Securities dealers
- Brokerage institutes and trading houses
- Asset management companies
- Clearinghouses
- Depositories
- Exchanges
- Foreign exchange and money brokers
- Corporate business houses
That said, let’s digress a little by looking into SWIFT network and the current issue in Ukraine.
Was Russia Disconnect From Swift Because of Its Invasion of Ukraine?
Of course! As of February 28, 2022, the U.S., EU, U.K., and Canada have agreed to increase the economic sanctions against Russia by removing some Russian banks from the SWIFT messaging system. Japan has also announced that it’ll follow suit.
What Information Do You Need for a Swift Transfer?
Like a wire transfer, you’ll need to submit some information to facilitate your SWIFT transfer. This information are:
- Name of the recipient
- The recipient’s address
- Name and address of the bank receiving the money
- SWIFT code of the bank (aka BIC)
- Recipient’s account number or IBAN
The SWIFT code just identifies the bank. The IBAN (International Bank Account Number) is longer and identifies a specific bank account.
Services SWIFT Offers:
The SWIFT system offers multiple services that help businesses and people to complete seamless and accurate business transactions. Some of the services offered are:
- Applications
SWIFT connections enable access to many applications, including real-time instruction matching for treasury and forex transactions, banking market infrastructure for processing payment instructions between banks, securities market infrastructure for processing clearing, settlement instructions for payments, securities forex, and derivatives transactions.
- Business intelligence
SWIFT just recently introduced dashboards and reporting utilities that help its clients get a dynamic, real-time view of monitoring the messages, activities, trade flow, and reporting. The reports enable filtering based on region, country, message types, and related parameters.
- Compliance services
Aimed at services around financial crime compliance, SWIFT offers reporting and utilities for Know Your Customer (KYC), sanctions, and anti-money laundering (AML).
- Messaging, connectivity, and software solutions
The core of the SWIFT business resides in offering a secure, reliable, and scalable network for the smooth movement of messages. SWIFT offers many products and services that help its users send and receive transactional messages through its various messaging hubs, software, and network connections.
How Long Does a Bank Transfer Take Between Different Banks?
Why is SWIFT Dominant?
Based on the London School of Economics, “Support for a shared network started to achieve institutional form in the late 1960s, when the Societe Financiere Europeenne ( SFE, a consortium of six major banks located in Luxembourg and Paris), created a message-switching project.
SWIFT was then founded in 1973 with 239 banks in 15 countries. By 1977, it expanded to 518 institutions in 22 countries. In 2022, more than 11,000 institutional members were hailing from over 200 countries and territories.
Although there are other alternatives like Fedwire, Ripple, and Clearing House Interbank Payments System (CHIPS), SWIFT continues to keep its dominant status in the market. Its success may be associated with how it frequently adds new message codes to send different financial transactions and the security of its platform.
Though SWIFT was initially made for simple payment instructions, it now sends messages for different types of actions, including secured transactions, treasury transactions, trade transactions, and system instructions. In SWIFT’s latest report, from January 2022, data showed 44.5% of SWIFT traffic is still for payment-based messages, while 50.6% represents security transactions, and the rest of traffic flows to Treasury, trade, and system transactions.
What’s the Timeframe for a Swift Transfer?
The time taken for a SWIFT transfer varies based on the destination, time zones, and different banking processes.
Contrary to what you might have heard, SWIFT transfers aren’t instant.
Before your money is credited to the recipient, it will pass through anti-fraud and anti-money laundering checks, which can cause delays.
Some banks may also pass your money through an intermediary bank if there is no direct relationship between your bank and the destination bank. This can also drag the process.
How to find a SWIFT code?
The SWIFT code, also regarded as a Bank Identifier Code (BIC), can be gotten by searching online. It is not personal information, so you can get it easily.
Some banks automatically show the SWIFT code on their statements, but this isn’t often the case. For obvious reasons, it is important to get the SWIFT code from a bank’s website.
Note that you are providing the SWIFT code for the bank receiving your money, not the bank you are sending it from.
IBAN Is Longer Than a Swift Code as It Also Includes Specific Account Info
IBANs vary in length depending on the country. They can be anything from 16 to 32 characters long. There are IBAN generators online that show you the structure of an IBAN for each country. While it might sound complex, an IBAN can be separated into logical parts, so it’s a case of putting it together. If you are scared of this step, a money transfer specialist can be of help.
How a SWIFT transfer works (in 4 simple steps):
Step 1: Identification check
All customers initiating an international payment need to be identified because of anti-money laundering rules and regulations. You may need to email a scan or photo of your passport and a current bill.
Step 2: Secure an exchange rate
To send money from one currency to another, you’ll need to agree on an exchange rate. Once you are ready to transfer your money, a bank or money Transfer Company will quote you their exchange rate. If you are satisfied, the exchange rate quoted will be locked-in for you.
Step 3: Send in your money
Before funds are converted, your bank or money transfer company will need to receive your money. If you use a bank, they will need your funds before you securer the exchange rate. But, if you use a money transfer company, they may allow you to secure a rate before sending your money.
Step 4: Your money is converted and sent
After your funds have been received, they’ll be converted into the currency needed at the exchange rate agreed. The money is then transferred using the SWIFT network to the destination bank account.
How Does Swift Make Money?
Ever sat down to imagine how the SWIFT network makes money?
You see, SWIFT is a cooperative organization owned by its members. Members are grouped into classes according to share ownership. All members pay a one-time joining fee, including annual support charges that vary per member class.
SWIFT also charges users for each message based on message type and length. These charges also vary depending on the bank’s usage volume; different charge tiers exist for banks that generate different volumes of messages.
Furthermore, SWIFT has created extra services, as stated above. These services are supported by the long history of data maintained by SWIFT. These include business intelligence, reference data, and compliance services and offer SWIFT other income streams.
How Important Is Swift to World Finance?
SWIFT has become an important part of the global financial infrastructure. Over 11,000 global SWIFT member institutions sent an average of 42 million messages daily via the network in 2021, increasing 11.4% over 2020.
How Long Does a Wire Transfer Take?
What Does Swift Mean for You?
Provided your bank is associated with SWIFT, then the network can be used to securely communicate a payment order and get your money from one location to another. Although as a customer, you should be aware of the following:
- Fees are often levied by correspondent and recipient banks
- If your SWIFT transfer involves 2 currencies, banks often apply poor exchange rates and make the difference
- SWIFT transfers can take up to 5 working days in some instances
If you are sending money via SWIFT, it can be very expensive, especially for smaller money. And, as noted, if your SWIFT transaction will need to go through intermediary banks, they normally will levy their fee. Though most banks will allow you to choose whether you, the recipient, or both, foot the bill for these extra fees, the costs can still accumulate.
In addition to that, if your money will need to be exchanged for another currency, banks can include their profit in the rate they give you. An extra cost.
If you are worried about these fees accumulating, you may consider using another option like wise over your bank for your international money transfers. Wise’s smart new technology actually waives those huge fees by sending your money via a series of local bank transfers worldwide. And you’ll receive the real exchange rate, the one you find on Google, taking the guesswork out of evaluating that additional cost.
Wise doesn’t use the SWIFT network for transferring money to South Africa, Japan, and US dollars to countries worldwide. But it works to lessen those expensive intermediary fees. And makes it clear when there may be fees to you. Upfront. So there aren’t any strange surprises.
SWIFT is just one of the organizations and systems that have changed modern banking forever. And it is worth it to do your research to ensure that you know what you are receiving.
