SWIFT Transfers Explained

As a business owner, you are probably used to sending money from one bank account to another on a regular basis. However, traditional money transfer methods such as checks and cash can be slow, inefficient, and expensive. 

In the modern digital age, you have other options for sending money securely and quickly. Perhaps the most convenient of these options is a SWIFT transfer. Whether you want to send or receive money internationally or domestically, transferring through SWIFT can make the process much easier than before. 

 This article will explain what SWIFT transfers are and how they work. Additionally, we’ll highlight the benefits of using SWIFT transfers, as well as their disadvantages.

Keep reading to learn more.

What Is a Swift Transfer?

A SWIFT transfer is an international bank transfer sent via the SWIFT network. The SWIFT network is a global system that allows banks to send and receive information about financial transactions in a secure, standardised way.

There are two types of SWIFT transfers: customer payments and interbank payments.

Customer payments are made by individuals or businesses to banks outside of their home country. For example, if you’re travelling from the United States to Europe and need to make a payment in Euros, you would make a customer payment using the SWIFT network.

Interbank payments are made between banks and usually involve large sums of money. For example, if one bank in the United States needs to transfer money to another bank in Europe, they would use the SWIFT network to do so.

The main advantage of using the SWIFT network for international bank transfers is that it’s very secure. Because each transaction is sent through the network using standard protocols, there’s less room for error or fraud. Additionally, because the network is used by so many banks around the world, it’s very efficient and fast.

What Are SWIFT/BIC Codes?

SWIFT/BIC codes are used to identify banks and financial institutions worldwide. They are eight or eleven characters long and are used by banks to process international wire transfers.

When you send or receive a money transfer via SWIFT, you will need to provide the recipient’s SWIFT/BIC code. This code is used to ensure that the funds are transferred to the correct bank account.

If you don’t have the recipient’s SWIFT/BIC code, you can usually find it on their website or by contacting their bank directly.

How Long Does a Swift Transfer Take?

Once a SWIFT transfer is initiated, it typically takes between 1-2 days for the funds to be processed and transferred to the receiving bank. However, the exact time frame will vary depending on the sending and receiving banks, as well as any intermediary banks involved in the transaction. In some cases, a SWIFT transfer may take longer than 2 days.

There are a few factors that can affect how long it takes for a SWIFT transfer to be completed:

 

  • The sending bank

Some banks may have slower processing times than others. If the bank you’re using to send money is located in a different country from the receiving bank, this can also add to the processing time.

 

  • The receiving bank

Just like with the sending bank, some receiving banks may have slower processing times than others. In addition, if the receiving bank is located in a different country from the sending bank, this can add to the overall processing time.

 

  • Intermediary banks

If your transaction involves an intermediary bank (or multiple intermediary banks), this can slow down the process as each bank will need to process and approve the transaction.

 

  • The amount of money being transferred

Larger transfers may take longer to process than smaller ones. This is because there are usually more steps involved in approving and processing larger transactions.

How to Transfer Money Using Swift?

Set Up a SWIFT account 

In order to use SWIFT for international money transfers, you will need to set up a SWIFT account with your bank. This is usually a simple process that can be completed online or by visiting your local branch. Once you have set up your account, you will be given a unique code that will be used to identify your transactions.

Fill Out a Swift Money Transfer Form

The next step is to fill out a SWIFT Money Transfer form. This form will require you to provide some basic information about the transaction, including the amount of money you are sending, the currency, and the recipient’s bank details. Once you have completed the form, you will need to sign it and send it to your bank.

Send the Swift Money Transfer Form to Your Bank

After you have filled out and signed the SWIFT Money Transfer form, you will need to send it to your bank so they can process the transaction. This can usually be done via email or by visiting your local branch in person. Once your bank has received the form, they will begin the process of sending the money to the recipient’s account.

Wait for the Money to Arrive in the Recipient’s Account

Once your bank has processed the transaction, it can take anywhere from a few hours to a few days for the money to arrive in the recipient’s account. The time frame depends on factors such as the banks involved and whether or not there are any holidays during which banks are closed. You should check with your bank to estimate how long the funds will take to arrive in their destination account.

How Much Does a Swift Transfer Cost?

Fees

Your bank will likely charge a fee for sending a SWIFT payment. The fee can vary depending on the bank and the country you’re sending money to. For example, Bank of America charges $30 for outgoing international wire transfers.

Be sure to ask your bank about any potential fees before you send a SWIFT payment. The last thing you want is to be surprised by an unexpected fee after you’ve already sent your money.

Exchange Rates

When you send a SWIFT payment in one currency, but the recipient receives the funds in another currency, an exchange rate will apply. The exchange rate is the rate at which one currency is converted into another currency.

The exchange rate can fluctuate, so it’s important to check the current rate before sending a SWIFT payment. You can use a site like XE Currency Converter to find out the current exchange rates.

For example, let’s say you want to send £500 from the UK to US dollars (USD). At the time of writing, 1 GBP = 1.29 USD. So, if you were to send £500, your recipient would receive $645 (500 x 1.29). However, if the exchange rate changes and 1 GBP = 1.35 USD, your recipient would receive $675 (500 x 1.35). 

As you can see, even a small change in the exchange rate can have a big impact on how much money your recipient receives.

Advantages of SWIFT Transfers

Speed and Efficiency 

One of the main advantages of SWIFT transfers is the speed and efficiency with which they can be completed. Thanks to the use of modern technology, a SWIFT transfer can be completed in a matter of seconds, which is a significant improvement on the older methods of transferring money between banks.

Another advantage of SWIFT transfers is that they are very efficient. The process is automated, so there is no need for manual intervention, which can often lead to delays. This means that SWIFT transfers are typically very accurate, and there is little chance of errors occurring.

Security and Reliability

Another key advantage of SWIFT transfers is the high level of security and reliability that they offer. Thanks to the use of sophisticated encryption techniques, SWIFT transfers are extremely secure and are much less likely to be subject to fraud than other types of financial transactions.

In addition, SWIFT transfers are also very reliable. The system is designed to operate even in difficult conditions, such as power outages or natural disasters. This means that you can be confident that your money will arrive safely even if there are problems with the infrastructure you are sending it from.

Disadvantages of SWIFT Transfers

Costs

Although SWIFT transfers are quick and secure, they can be costly. Banks typically charge a fee for each SWIFT transfer, and these fees can add up, particularly if you’re making multiple transfers. In addition, banks may also charge a currency conversion fee if the transfer involves a foreign currency.

Complexity

SWIFT transfers can be complex, particularly if you’re new to the process. There’s a lot of technical jargon involved, and it can be difficult to understand how everything works. 

In addition, you’ll need to have the right banking information for the recipient, which can be tricky to obtain if you’re not familiar with the process.

Conclusion

A SWIFT transfer is a quick and efficient way to send money internationally. While there are some costs and complexities associated with this type of transfer, the advantages of speed, security, and reliability make SWIFT an attractive option for many people.

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