What is the SWIFT system in simple words and how it works. How to make a Swift translation

Contrary to the popular opinion among ordinary people, SWIFT is not a payment system, but a kind of messenger with which banks from different countries exchange information about transactions. The Swift system allows you to quickly process incoming messages and make payments.

Such an exchange is also possible in the absence of a messenger, for example, using telephone communication, however, then the speed of calculations is significantly reduced. The free exchange of information is carried out between the participants of the system, therefore, in case of disconnection of one of them, the procedure for settlements between companies and individuals is violated.

Who uses SWIFT

By 2015, more than 11 thousand participants from 200 countries of the world were connected to the SWIFT system, which is legally a commercial enterprise with headquarters in Belgium. Among them are private and public companies, including banks, individuals, brokers, trading exchanges. All of them are attracted by the potential of SWIFT, which consists in:

• availability of the system to any categories of users;
• no need to open an account to transfer funds;
• the possibilities of using different types of currencies;
• the right of the participating countries to independently set limits on the transfer of funds.

What is BIC and IBAN

To make an international transfer, the minimum amount of information required to perform similar operations within the country will not be enough. When using SWIFT, BIC and IBAN are required.

The first is a bank identification code, the Russian equivalent of which is the BIC. This identifier includes the following information:

• bank code (4 digits indicating, as a rule, the abbreviated name of a financial institution);
• alphabetic country code consisting of 2 characters;
• two-character numeric or letter code of the region in which the bank is located;
• three-digit branch code.

The second, IBAN, is the international code of the recipient organization of the transferred funds. It is encrypted:

• country code consisting of 2 letters;
• a check number of 2 characters, the purpose of which is to verify the authenticity of the account and protect information from errors;
• the first 4 characters of BICHU.

How the SWIFT system works

The scheme of transferring funds using SWIFT implies the creation of a message with the necessary information for the transfer, which is sent to a confidential system through a special terminal. Then the information is sent to the operating network, where it is assigned a unique number, processed and forwarded to the SWIFT participant. A transaction is possible only if the message has passed verification.

At the same time, the duration of the process will depend on whether the participants of the system use correspondent accounts. If yes, the transfer takes about one day, if not, the transaction is carried out within a week.

How to make a swift transfer

It is preferable to make private transfers with the opening of an account. In this case, the operation can be performed both faster and cheaper. The transfer fee is charged on both sides, and the minimum fee is $ 10. By the way, the commission charged by SWIFT is lower than the fees charged by Western Union.

If the transfer amount does not exceed $ 1000, it is more expedient to use the services of payment systems, for example, VISA or Mastercard. Such systems are focused on processing payments using plastic cards, so it is much more convenient to make transfers with their help.

Special importance when using SWIFT is attached to the details, including:

• SWIFT code and international name of a financial institution;
• SWIFT code and the name of the correspondent bank;
• recipient’s account and transit account.

If the recipient’s account is not involved in the transaction, the passport data and the full name of the recipient of funds will be required to make the transfer.  To make a transfer, the sender must contact a credit institution, provide the above details to the operator, and also present his passport.

Upon completion of the transaction, the person to whom the transfer was made will be able to receive funds from the bank where he has an account opened. And if the transfer is carried out without specifying the account, then in any branch. In this case, it is important that the destination works with the currency in which the transfer was made.

Published: 23 September, 2022