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Swift Code
The Swift network assigns a unique identifier to every institution that uses its services, known as Swift Code or Business Identifier Code (BIC). These codes adhere to International Organization for Standardization (ISO) 9362, they can be either 8 or 11 characters long.
The Swift Code offers a reliable and secure method of facilitating cross-border payments and enables banks to create an extensive intermediary network.
For global commerce, secure digital transactions are inevitable, and SWIFT Code is the best option for safe cross-border transactions. Just like the (IFSC) Indian Finacial System Code, which is necessary for domestic money transfers, the Swift Code is a necessity for international transactions.
What Are Swift Codes?
SWIFT is an acronym for Society for Worldwide Interbank Financial Telecommunications. SWIFT is a network through which banks can talk to one another. SWIFT is not controlled by an individual; it is a cooperative, global, member-owned organization. Over 11,000 financial institutions in over 200 countries utilize SWIFT services.
- The SWIFT network uses BIC codes to facilitate secure payments such as international bank wires, international money transfers, and SEPA payments. Its also used as a messaging system alone.
- When a business uses the SWIFT network, it is not called “transferring money”; instead of this, it is called a "payment order between two banks.
Alternate names for a SWIFT code are:
- SWIFT ID
- BIC code
- ISO9362
Format Of A Swift Code
The Swift Code is a 8 to 11 character which a specific identifier also referred to as the Business Identifier Code (BIC). It adhere to the International Organisation of Standardisation (ISO) 9362.
- The first four digits are the code of the financial institution
- Fifth and sixth digits: The country code
- Seventh and eighth digits: The city code
- Final three digits: The specific bank branch (optional)
The branch code is analogous to a routing number used in the US. Some SWIFT codes have a branch code replaced by simply XXX. This will direct the transfer to the bank head office. The international standard for the SWIFT/BIC code is ISO 9362, so you find the term ISO used interchangeably with SWIFT in some instances. The ISO dictates the shape that a SWIFT code will have, what letters and numbers are available for use, and the length of the code.
How Does SWIFT Function in Cross-Border Transactions
Swift operates in cross-border transactions by serving as a secure messaging network that enables banks to send electronic payment instructions to one another. Instead of transferring the funds directly, SWIFT facilitates the communication of essential details, such as the recipient’s bank account details and the transfer amount. This ensures standardised and trustful methods for initiating international money transfers between various financial institutions across borders.
Here is an example of how an individual might make use of the SWIFT messaging system:
Anushka lives in Canada and wants to send money to her friend, Mary, in France. To do this, Anushka goes to her bank, General Financial, and initiates a money transfer. Anushka provides his bank with Mary’s account number at her bank in Canada, along with that bank’s unique SWIFT code. General Financial subsequently sends the payment over the safe SWIFT messaging system. The money is then credited into Mary account when Mary bank receives the payment.
Significance of Swift Code In International Payment
A Swift Code is significant for international payments because it serves as a bank unique identifier, enables proper routing of funds between borders, and ensures money goes to the intended financial institution.
- Identification: A Swift Code or BIC code is used to identify a bank in the world, including where it is located and from which country, for proper routing of cross-border payments.
- Secure communication: SWIFT is a network through which banks securely communicate with other banks about international transactions by using the SWIFT code to address the receiving bank.
- Fewer errors: By offering a standardized structure, SWIFT codes reduce the possibilities of errors in cross-border transfers as a result of incorrect bank information.
- Compliance: SWIFT codes are an essential aspect of compliance with anti-money laundering and other regulatory requirements for cross-border transactions.
How To Find Swift Code?
A SWIFT code can be easily located in a variety of places. Here are a few:
- Bank account statements
- Online banking customer portal
- Bank’s website
- Call the bank
How to Find the SWIFT Code
You can easily find the Swift Code of your bank or financial institution on your bank statements. Additionally, certain websites can help you find your bank SWIFT code, such as https://bankifscswiftcode.com/swift. For the most accurate information, it best to contact your bank directly or visit its website.
SWIFT vs IBAN: Diffrences
There are two internationally recognized and standardized methods for identifying bank accounts during international bank transfers: the International Bank Account Number (IBAN) and the Society for Worldwide Interbank Finacial Telecommunication (SWIFT) code. The basic difference between both of them is the type of information each code provides.
An International Bank Account Number is used to identify the specific bank account that is involved in an online transaction, whereas a Swift code identifies a particular bank during these transactions. Both IBAN and Swift codes are used for transferring money overseas with the assurance of smooth operation in the international financial market.