Guide to SWIFT Code: What Is SWIFT and How Does It Work?



The modern world is global and international, just like the world economy. In the 70s boundaries between different continents and countries started to blur and development of science allowed labor productivity to grow. The amount of companies that started to work on an international scale has grown significantly and a lot of companies started to open their factories in various countries like Asia, South America, Europe and others.

However, each country had its own rules for funds transferring and its own banking systems.

As a result, the strong need for a unified non-cash payment system and unified banking rules appeared.

That’s why in 1973 in Belgium large financial institutions, mostly commercial banks, reached an agreement to create SWIFT. The main goal of creating such a system was demand in a fast, reliable and secure channel, so that the banks could exchange banking messages and information.

What is SWIFT?

In simple words, the SWIFT is the biggest international interbank system that is operating all around the world. There are other interbank systems, but we will not talk about them today.

SWIFT is an abbreviation that stands for the Society for Worldwide Interbank Financial Telecommunication. It is a quick and secure way for banks to exchange information about fund transfers, payments and securities exchange over a special SWIFTnet network, which operates on the same principle as the Internet.

This payment system is used only at interbank level, unlike payment systems like Visa and Mastercard. For example, if there is an international payment from the Chase Bank to HSBC UK branch, they use the following code: HBUKGB4B (SWIFT code HSBC UK).

How does SWIFT work?

The system uses standardized codes that help to send information. To complete a transaction, the bank indicates in the payment order:

  • SWIFT-code (BIC) is an identification number of the beneficiary bank that includes the code of the financial institution — 4 characters, country — 2 characters, region — 2 characters, and optional details of branch — 3 characters. The BIC is 8 to 11 characters long;
  • IBAN is an international bank account number that complies with ISO:13616 standards. Contains country code — 2 characters, check digits — calculated according to ISO:7064, bank account and bank number (BIC). IBAN length is up to 34 characters.

The process of fund transfers in the most general form look this way:

  • The financial institution creates a message with the necessary details (includes a title, body text, trailer);
  • Routes to a confidential network through a computer terminal known as CBT;
  • The CBT communicates with a general purpose computer that collects data from the RGP regional processor and redirects the information to the operations center;
  • At the end of the check, the sender receives a notification: ACK (positive result) or NAK (negative result). All the transactions are assigned with a unique number;
  • Information goes to the target participant in case of a positive response.

Who uses SWIFT service?

A broad range of different participants of the global economy uses this service. Banks, money brokers, security dealers, foreign exchanges, depositories, exchanges, corporate business houses and others use it. This system is great both for individuals that are transferring small sums around the world and large financial institutions that are transferring millions.

Currently, the system is connecting more than 11,000 banks and financial institutions all over the world.

List of the biggest banks that are using SWIFT includes:

  • Citi;
  • BNY mellon;
  • Deutsche Bank;
  • BNP PAribas;
  • Standard Chartered;
  • Bank of China.

What is required to make a SWIFT transfer?

International transfer can be made from an account, without a bank account, can be credited to an account, paid out in cash and can be credited to a corporate business account.

To transfer funds you need to know such information as:

  • SWIFT-number of payee’s bank;
  • Full name of the bank;
  • Full name of beneficiary;
  • Beneficiary’s account number in IBAN format;
  • The name of the bank branch where funds will be transferred;
  • Details of intermediary banks.

After that, the client should check the application. If there are any mistakes or incorrect information, then the bank will take a commission in order to change the details. Canceling or making changes to the transfer can take up to 30 days, especially if the error is detected when the intermediary bank gets the transfer on their account. Usually, transfer of funds takes approximately 1-3 days, and sometimes up to 5 days.

Is there a fee for using SWIFT?

Unlike Western Union, for example, the SWIFT system does not have a single tariff scale. The commission in the transfer system is set by each bank individually, depending on the amount of transfer and the country of a receipt.

Commissions change from time to time, so it is better to check the actual rates on the spot. Sending small amounts via SWIFT is not very profitable, but if you transfer large sums you can save a lot.


SWIFT helped to develop the banking sector all over the world and eased the process of cross-border transfers. Moreover, it is a fast, secure and reliable way to transfer the funds that suits both individuals and large financial institutions.

Silverbird as a digital bank supports not only SWIFT transfers, but also SEPA transfers. We offer you a global account with direct IBANs, work with more than 30 currencies and give you the opportunity to be a part of the international market.


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