SWIFT Money Transfer - What Is It? How It Works?


SWIFT Money Transfer - What Is It? How It Works?

By Jupiter Team · · 6 min read

Have you ever wondered how a money transfer happens overseas? Behind the majority of international money transfers is a vast network that ensures a secure and safe transfer. The network is called SWIFT or Society for Worldwide Interbank Financial Telecommunications. SWIFT is a vast messaging network that most banks and financial institutions use for sending and receiving money transfer instructions. Read to find out more about how the SWIFT network works.

What is SWIFT Money Transfer?

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a member-owned cooperative and is the largest and most streamlined method for international payments. It ensures safe and secure financial transactions for all its members. There are more than 11,000 member banks in the SWIFT network across 200 countries that exchange millions of standardised messages every day.

The messaging network uses a standardised system of codes to transmit financial information and instructions securely. The network doesn't hold or transfer assets. Rather it only facilitates the transfer by sending information.

Before SWIFT, banks used a system called TELEX for wire transfers. TELEX senders had to send the instructions in full sentences, which were translated and interpreted by the receiver. This made the entire money transfer process very slow. Moreover, TELEX was less sophisticated and lacked the needed security required for financial transactions. Hence, there was a high need for a more secure and faster messaging network for financial transactions. SWIFT was born to cater to this need. It was formed in 1973 by six major international banks to operate global financial transactions securely.

Though the network started to send financial information and instructions, it is also used to send reference dates for security, treasury, and trade.

What is SWIFT Code?

You are not transferring money from one bank to another through the SWIFT network. Instead, you send an instruction or payment order using a SWIFT Code.

A SWIFT code is unique for every bank and financial institution. It contains eight or eleven characters and is also called the bank identifier code (BIC). Some other names for the SWIFT code are SWIFT ID or ISO 9362 code.

The first four characters of the code are institute code or bank code. The next two characters are the country code, followed by the location or city code which is again two characters. Finally, the last three characters are optional, which the bank uses to assign codes for individual branches.

Let’s decode the SWIFT ID for HDFC Bank. The SWIFT code is HDFCINBBHYD, which means the code is for HDFC bank in India for a branch in Hyderabad.

How does SWIFT Money Transfer work?

By using the SWIFT network, you are not actually transferring the money. Instead, you are sending an instruction to transfer money using standardised codes. The process of sending this message depends on whether the two participating banks have an established relationship or not.

Process if the banks have established a relationship

First, the sender's bank sends a message via the SWIFT network to the receiver's bank with payment instructions and the contact of the sender.

Next, the sender's bank debits the amount from the sender's account and credits it to the commercial account of the receiver’s bank.

Finally, the receiver’s bank will credit the funds into the receiver’s account.

Since the banks have an established relationship, transferring money is easy. Else, another intermediary is usually involved in the process.

Process if the banks don’t have an established relationship

First, the sender’s bank debits the funds from the sender’s account and sends an instruction to the intermediary to transfer the funds to the receiver’s bank.

Next, the intermediary debits the money from the sender's commercial bank and credits it to the receiver bank’s commercial account after applying the transfer charges.

Then, the intermediary bank sends an instruction with the required details to the receiver’s bank to transfer funds to the receiver.

Finally, the receiver’s bank will credit funds into the receiver's account.

Who uses SWIFT payments?

SWIFT is used by its members present across the world. Following are some of the users of the SWIFT network.

  • Banks
  • Asset management companies
  • Trading houses
  • Exchanges
  • Brokerages
  • Depositories
  • Foreign exchange money brokers
  • Corporate business houses
  • Businesses with international transactions
  • Individuals making a wire transfer

SWIFT Transfer Charges

The SWIFT network chargers its users on the length of the message and message type. The charges include a transfer fee, an exchange rate, and a double currency conversion rate. Big banks and institutions charge 3-5% on the exchange rate for each transfer. The exchange rate also varies from bank to bank and is based on the amount you send.

Additional SWIFT Services

Apart from offering a platform for sending financial instructions between banks, SWIFT offers multiple services for seamless and accurate transactions. Below are some of the additional services.

  • Applications: SWIFT offers multiple applications that give users access to real-time instruction matching, treasury, and forex services. It also offers banking market infrastructure for processing payments between banks and clearing and settlement instructions for the securities market. Additionally, it also clears instructions for securities, derivatives, and forex transactions.
  • Business intelligence: SWIFT offers its users reports and dashboards, enabling them to get a 360-degree view of messaging, activity, and trade flow. This helps its customers to make faster decisions using the data provided by the SWIFT network.
  • Compliance services: It offers financial crime compliance services, including utilities for KYS (know your customer), anti-money laundering, and sanctions.
  • Messaging and connectivity: SWIFT offers multiple messaging hubs and software for seamless messaging between financial institutions.
  • Global payment innovations (GPI): SWIFT GPI aims to improve the traceability and transparency of all cross-border payments. This enables all its members to track the transaction's status at any given time.


SWIFT is the most popular and dominant messaging network system for financial transactions despite having quite a few competitors like Ripple and Fedwire. This is mainly because SWIFT adapts to the market's new financial needs. Hence SWIFT is considered the most reliable and flexible system for wire transfers.

Frequently Asked Questions

How much time does it take to transfer through SWIFT?

A SWIFT transfer usually takes 2-5 working days. This is when all the details, such as the receiver's bank details and SWIFT code, are provided accurately. Else, the transaction will be cancelled by SWIFT.

Is a SWIFT transfer the same as a bank transfer?

No, a SWIFT transfer is not the same as a bank transfer. The money is transferred directly to the customer's account in a bank transfer. But in a SWIFT transfer, the bank sends an instruction to transfer funds and send it to the receiver’s account.

What is SWIFT full form?

SWIFT stands for The Society for Worldwide Interbank Financial Telecommunication.

How do I send a SWIFT payment?

To send a SWIFT payment, you need to have the recipient's name and address, as their bank details such as name, address, SWIFT code, and account number. You can make the transfer online using your net banking facility.

How much does SWIFT transfer cost?

A SWIFT transfer has multiple charges, such as transfer fees, exchange rates, and hidden fees. Banks charge around 3-5% on the exchange rate for each transfer.

Can I track my SWIFT transfer?

Yes, you can track your SWIFT transfers online for free using the SWIFT basic tracker on the SWIFT website.

Is SWIFT money transfer safe?

Yes, the SWIFT money transfer is absolutely safe and secure as banks use a fraud prevention process to transfer money.

Why do SWIFT transactions take so long?

The SWIFT transfer passes through three correspondents before it reaches the receiver and usually takes 2-5 business days. This is because banks use a fraud prevention process to transfer money, making it a safe method of transfer.

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