Want to make international money transactions? Well, for this you will require a swift banking system. SWIFT allows you to make your overseas money transfers safer, easier and quicker.
Those who are not aware of this banking term find difficulty during payment transfers. So, it would be better to clear your concept related to SWIFT.
For this, you can scroll down and read this article to know about SWIFT, its benefits, uses, and costs.
Understanding the swift banking system
One of the most common banking terms that we hear often is SWIFT banking. Those who’re new to this banking term must be confused about what this is all about. Well, SWIFT payments are used for making transactions overseas.
This is done using the SWIFT international payment network. Do you want to transfer money to someone overseas? Earlier, transferring money overseas was a cumbersome process as it required a lot of steps. Today, it is easy to make overseas transactions.
You can do this either by visiting your bank branch or by using your internet banking. Do you know how this happens? Well, for this, you need to use the SWIFT banking system.
With this SWIFT network, consumers can send or receive international electronic payments. This is why, it is also sometimes referred to as international wire payments.
The SWIFT payment network helps individuals and businesses in accepting or transferring international money. This can be done through electronic or credit card payments.
- The SWIFT won’t transfer funds but instead, it sends payment orders or messages between banks through its SWIFT codes. The meaning of this code is to transfer money overseas quickly and precisely.
- According to reports, it has been observed that in 2021 more than 12,000 global SWIFT member institutions sent approximately 41 million messages per day through the SWIFT network in 2021. This is an increased number of what was made in the year 2020.
- The international money and security transfers that you are making are because of SWIFT. SWIFT stands for Society for Worldwide Inter bank Financial Telecommunications. It works as a vast messaging network that every bank and other financial institution use to securely send and receive information for money transfers.
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What is the SWIFT code?
For performing SWIFT, you need to have a swift code. What this code is and how useful it is? These are a few common queries of consumers. The SWIFT code is a public information that consumers can find on their bank’s website. It’s easy to find the SWIFT code.
When you use the baking service of SWIFT, you are sending a message of a money transfer or “payment order” between two banks. The entire process of SWIFT is done using a SWIFT code.
A SWIFT code will identify each unique member within its network. SWIFT code will have either 8 or 11 characters which are known as the SWIFT ID or bank identifier code BIC.
The first to further characters represents the institute code and 5-6 is for country code. 7-8 characters will define the location/city code. The last 9-11 characters are optional characters that represent individual branches of the bank.
How does the SWIFT banking system work?
The original application of SWIFT was to make a way for banks so they can communicate faster and more securely. SWIFT specifically came into introduction concerning international payment transactions.
This sort of network channels the message or payment orders for enclosing payment instructions from the issuing bank to the remitting bank. Today, almost every bank is engrossed in a SWIFT transfer to move funds from one account to another.
Who can make use of SWIFT?
In the beginning, SWIFT was only used as a communication network to facilitate communication about treasury and correspondent transactions only for international money transfers.
Later on, the application of SWIFT changed and today it is used widely by individuals as well as businesses. Here are some of the entities that can make use of SWIFT:
- Exchanges and Depositories
- Banks for making overseas money transfers
- Brokerage institutes and trading houses
- Individuals or businesses who want to make international wires or money transfers
- SWIFT is also needed by Foreign exchange and money brokers
What Are the Benefits of using the SWIFT banking system?
If you want to make an international money transfer then you will need SWIFT. Swift payments can be used for making global payments simpler and easier than ever. Whether you are an individual or a businessman, you can send or receive money without any international boundary restrictions.
So, for those who are conducting business overseas, this SWIFT payment system allows them to make easy money transfer. Along with this, this system will safely and quickly pay your business clients, associates, partners, or employees.
Along with this, there are many other benefits of the SWIFT banking system that you must explore:
- There will be complete transparency in the payment process. SWIFT network provides all the details to the consumers. If you know exactly how much you are going to pay for your transaction then it becomes easy to complete the transaction process. Therefore, you will be notified about everything in advance to avoid last minute confusion related to SWIFT.
- Another crucial benefit of SWIFT is accessibility. With this network, global businesses can make communication without any barriers. This is because SWIFT breaks down these barriers to make communication between banks and countries.
- With SWIFT, accountability is easy and possible. If you are using SWIFT for money transfers then you can easily track your payment from bank to bank. With this, both parties will know when the payment will be received and sent.
- One of the best benefits is that SWIFT is reliable and it makes payments across the globe. With a SWIFT enabled bank account, you can make payments in almost 150 different currencies.
What is the SWIFT Cost?
With so many features and benefits, it’s obvious for consumers to ask about the cost of doing SWIFT payment transfers. Well, SWIFT is a cooperative society that has its members.
All the members pay a one-time fee and some annual charges. In addition to this, the messaging system will also make some money by charging the consumers of using SWIFT.
What would be the charges for SWIFT? These charges depend on different factors and will vary based on the bank’s usage.
This means that you will have to pay different fees for international payments from one bank to the next.
Apart from this, SWIFT also charges for extra services such as global payment innovations.