SWIFT Money Transfer: The Ultimate Guide
SWIFT money transfers are how the world sends and receives funds across borders today. The Society for Worldwide Interbank Financial Telecommunications (SWIFT), a member-owned cooperative, facilitates secure and reliable transactions worldwide. In this blog, we’ll explore how SWIFT operates, its importance in global payments, and whether faster, more cost-effective alternatives exist.
Handling over USD 5 trillion daily, it’s the backbone of most international money transfers. In this blog, we’ll break down SWIFT money transfers, explain SWIFT codes, guide you through making a transfer, and explore faster, cost-effective alternatives for receiving international payments.
What is SWIFT?
Started in 1973 by 239 banks, SWIFT is a member-owned cooperative based in Belgium. Today, over 11,000 banks and financial institutions in 200+ countries use the SWIFT system, making it a global network.
SWIFT itself isn’t a bank or financial institution; it’s a messaging network that facilitates secure communication between banks for transactions like money transfers via a standardized code system. Most countries rely on SWIFT for secure cross-border communication. As of November 2022, SWIFT handled an average of 44.8 million financial messages daily, with most traffic related to payments and securities.
What is a SWIFT Money Transaction?
With all the talk about SWIFT, SWIFT codes, and the messaging system, understanding a SWIFT transaction can seem complex. Let’s break it down with a simple example:
Imagine, you as an exporter from Bangalore, are expecting a SWIFT payment from your client based out of the United States. You have an account with say Axis Bank and your client asks for your account details including your account number and the branch-specific SWIFT code.
Next, he visits his Central bank, say Bank of America to initiate the SWIFT money transfer. Bank of America sends a SWIFT message through the secure SWIFT network to Axis Bank’s Bangalore branch. Upon receiving the SWIFT transactional message, Axis Bank processes the payment and credits the funds to your account.
Sometimes, the sender's and recipient's banks lack a direct financial relationship. For instance, if Axis Bank and Bank of America don't have an established connection, a direct SWIFT transfer can't occur. That's where an intermediary bank steps in.
An intermediary bank is essential for international SWIFT transfers between banks in different countries without a direct relationship. In this case, a bank like Citi can bridge the gap. The payment from Bank of America would be routed through Citi Bank before reaching the recipient's Axis Bank account.
However, it's important to note that involving intermediary banks can delay settlement times and may incur additional fees.
What is a SWIFT Code?
SWIFT code is a unique 8- or 11-character alphanumeric code that is assigned to banks and financial institutions. The SWIFT code contains essential details about the country, location and branch of a bank
Breakdown of a typical SWIFT code:
- The Bank Code (4 letters): The first four characters of a SWIFT code represent the institution's unique identifier. They could be letters or numbers, such as "BARC" for Barclays Bank or "HSBC" for HSBC Bank.
- The Country Code (2 letters): The next two characters represent the country where the institution is located. For example, "CA” for Canada, GB" for the United Kingdom, or "FR" for France.
- The Location Code (2 letters or digits): Next are two characters that identify the institution's location within the country. They can be letters or numbers and may denote a specific city or region. For instance, "LX" for Luxembourg, "NY" for New York, or "SG" for Singapore.
- The Branch Code (optional—3 letters or digits): If the institution has multiple branches in the same location, it helps direct the transaction to the correct branch. As this code is optional, not all SWIFT codes include the branch code, making them 8 characters long instead of 11.
Examples of SWIFT Code:
Here is the breakdown of two SWIFT codes for a better understanding:
SBININBB101: This unique code refers to the State Bank of India’s Mumbai office. "SBIN" is the bank code, "IN" stands for India, "BB" indicates Mumbai, and "101" denotes the branch in a specific locality.
DEUTDEFF500: This SWIFT code belongs to Deutsche Bank's Frankfurt branch in Germany. "DEUT" represents the bank, "DE" is for Germany, "FF" signifies Frankfurt, and "500" indicates the specific branch at Bad Homburg, a town in the Frankfurt region.
Is SWIFT Money Transfer safe?
SWIFT money transfers are largely considered safe. The SWIFT network is trusted worldwide for securely handling international financial transactions between banks. Here's why people feel confident using it:
Strong Encryption: SWIFT uses encryption to protect your transaction details, making sure that only the intended bank can see the information.
Tight Access Control: Not just anyone can use the SWIFT network—only verified banks and financial institutions have access, minimizing the risk of unauthorized transfers.
Global Trust: SWIFT adheres to international regulations, which helps ensure that your transfer is handled according to the highest standards.
Fraud Monitoring: The system constantly monitors for unusual activity to help prevent fraud before it happens.
While the SWIFT network is highly secure, it's still important to double-check the details you provide to avoid any errors or delays.
How do I make a SWIFT Money Transfer?
Making a SWIFT transfer is similar to a local bank transfer but requires some extra details. Here’s how to do it:
Step 1: Initiating the Transfer
Contact your bank or log in to your online banking portal to start a SWIFT transaction. You’ll need to provide the recipient’s name, bank name, address, unique SWIFT code, currency, and the transfer amount.
Step 2: Verification
Your bank will verify the details and check if you have sufficient funds.
Step 3: Debit
Once everything is verified, the bank will debit the amount from your account and provide a confirmation message or reference number.
Step 4: Credit
The funds are then sent via SWIFT to the recipient’s bank. After verification, the recipient's bank will credit the amount to their account.
SWIFT Money Transfer Charges
Broadly, SWIFT charges can be broken down under the following heads:
- Outgoing Fee: The sender’s bank may charge a fee based on the transfer amount and destination, which can vary.
- Incoming Fee: The recipient’s bank may also charge a fee for processing incoming transfers, which again varies by amount and country of origin.
- Forex fee: A foreign exchange fee may apply for currency conversion, varying based on the exchange rate and the bank's policy.
Now, it is important to clarify that SWIFT fees vary depending on the bank you use. Each bank sets its own charges for outward transfers, so the fees can differ based on the bank and where it is located. Here are the SWIFT charges for sending money abroad with some of the most popular banks in India:
ICICI Bank
| Mode of Remittance | SWIFT Money Transfer charges (INR) |
| SWIFT transfer initiated through ICICI Bank (all currencies other than USD in USA) | 1000 |
| SWIFT Transfer initiated through ICICI Bank branch (USD in USA) | 1500 |
| SWIFT Transfer initiated through ICICI Bank Internet Banking / iMobile Pay App (all currencies other than USD in USA) | 750 |
| SWzTransfer initiated through ICICI Bank Internet Banking / iMobile Pay App (USD in USA) | 100 |
HDFC Bank
| Amount | SWIFT Money Transfer charges (in INR) |
| Up to USD 500 or equivalent | 500 |
| Above USD 500 or equivalent | 1000 |
PNB
PNB’s SWIFT fee stands at INR 500 + GST. However, it is worth mentioning that additional commissions ranging from INR 500-1000 may also be levied depending on the amount that is being sent abroad.
Yes Bank
Yes Bank’s charges for SWIFT transfers depend on the type of savings account you have. The following table shows the different types of YES savings accounts and their corresponding SWIFT charges:
| YES FIRST | YES PREMIA | YES Prosperity and Other Variants |
| INR 250/transaction | INR 500/transaction | INR 750/transaction |
How Long Does a SWIFT Money Transfer Take?
While SWIFT claims that 89% of international transactions are processed within an hour, that doesn't tell the full story. The clock only starts when the sender’s bank sends the payment to the SWIFT network and stops when the receiver’s bank acknowledges it. After that, your bank will contact you for ‘disposal instructions.’ This may require you to submit documents, fill out forms, or deal with forex rate fluctuations. As a result, the entire process can take up to 5 business days or more, with additional delays caused by factors like:
- Incorrect recipient information
- National or bank holidays
- Processing times of the banks involved
- System outages or technical issues
Therefore, it is always a good idea to double-check relevant information to receive your SWIFT payments in a timely manner.
SWIFT Vs Virtual International Bank Accounts: Which One Should You Pick?
SWIFT payment system remains the most payment method option for cross-border transfers, but its high costs and longer processing times have led businesses to seek alternatives. One such solution is international virtual bank accounts. Platforms like Skydo provide businesses with free virtual accounts in major regions such as the US, UK, Europe, Canada, Australia, and Singapore. These virtual accounts function just like local bank accounts, allowing businesses to receive payments from clients in these regions via local transfers instead of costly international SWIFT transactions.
For example, if your client is based in the US, they can make a simple local bank transfer to your US-based virtual account using your international bank account number, avoiding SWIFT fees and delays. Skydo then consolidates these payments and transfers the funds to India, converting them at live forex rates. This ensures that exporters receive the full amount without losses from unfavourable exchange rates. The converted funds are then deposited directly into your local Indian bank account, all within 48 hours—offering a fast, cost-effective, and transparent alternative to SWIFT. Switch to Skydo today!
What are some of the essential documents for a SWIFT transfer?
Some essential documents include the sender’s name and address, the recipient’s name, address, SWIFT code, purpose of payment, and transfer amount.
Is SWIFT transfer safe?
Which Banks are best for SWIFT Money Transfers?
How long does a SWIFT bank transfer take?
