SWIFT payments and codes explained

What is the SWIFT payment system?

To understand the SWIFT payment system, we must first understand what SWIFT is. 

The Society for Worldwide Interbank Financial Telecommunication is a “global member-owned cooperative and the world’s leading provider of secure financial messaging services.” It’s a messaging system that financial institutions use to securely send information and instructions for financial transactions.

The SWIFT system is operated by central banks within the G10 countries, the European Central Bank, and the National Bank of Belgium. Although SWIFT manages millions of secure messages per day and is a crucial part of our global financial system, it is not a financial institution itself. It’s a payment network that does not actually hold any assets. 

What is a SWIFT code?

One of the main components of the SWIFT payment system is the SWIFT code. 

SWIFT gives each financial institution in the SWIFT network a unique code of either eight or 11 characters. This code is called the SWIFT code or the bank identifier code

Example of a SWIFT code

To understand how a SWIFT code is assigned, let’s use the example of Deutsche Bank. The SWIFT code for Deutsche Bank is DEUTDEFFXXX. A SWIFT code is broken up into four parts: the bank code, country code, location code, and branch code. For example, below is the breakdown of Deutsche Bank’s SWIFT code:

  1. Bank code: This part of the SWIFT code usually looks like a shortened version of the bank’s name (i.e. DEUT).
  2. Country code: This part of the SWIFT code identifies the country the bank is based in (i.e. DE).
  3. Location code: This part of the code usually identifies what area of the country the bank is located in (i.e. FF).
  4. Branch code: this part of the code indicates what part of the bank you’re accessing.

Like many other banks, Deutsche Bank has multiple SWIFT codes. Which one is used depends on what a customer is trying to do within the financial institution, which is why it’s best to refer to your bank statement or give your bank a call to ensure you’re using the correct one for your needs.

How to use a SWIFT code

When making an international money transfer using SWIFT, customers should know and use the SWIFT code for the bank they’re trying to send money to. This ensures that the money goes to the correct bank without unforeseen interruptions when making cross-border payments.

You can find a SWIFT code by simply searching online. Each bank website should have one listed for your reference. 

Is a BIC code the same as a SWIFT code?

A Bank Identifier Code (BIC) and a SWIFT code are often used interchangeably within articles and other media sources. However, SWIFT is the name of the messaging system itself and the BIC is the actual code to use the system.

How does a SWIFT payment work?

To make a SWIFT payment, you need the following information:

  • Name of the payee
  • Payee’s address
  • Name and address of the payee’s preferred bank
  • SWIFT code/BIC of the bank
  • Payee’s account number

While SWIFT’s reach is expansive, it doesn’t cover the entire globe. When sending money with SWIFT, there are two scenarios that you may encounter:

  1. The banks already have an established relationship
  2. The banks do not already have an established relationship

When the banks already have an established relationship, there may be a quicker turnaround time for the money transfer. For example, a payer’s bank will send a SWIFT message with payment instructions to the payee’s bank. Then the payer’s bank will take the money out of his account and credit the payee’s bank, and soon after, that money will arrive in the payee’s personal account. 

However, when the banks do not have an established relationship, they use an intermediary bank to facilitate the money transfer. A payer’s bank will debit the payer’s account by the amount they’re sending, then the bank will ask the intermediary to debit their overall commercial account by the same amount and credit the payee’s bank’s commercial account. 

The intermediary bank charges a fee for this service and transfers the remaining amount to the payee’s personal bank account.

How much does SWIFT cost?

SWIFT payments can vary considerably in cost. First, SWIFT is a cooperative and is owned by members, who are categorised into different sections based on their level of ownership. Members pay a one-time fee plus annual fees dependent on membership class.

The SWIFT messaging system itself charges users depending on the type of message and length. These costs vary depending on the bank’s volume of SWIFT messages. 

Transfer times for SWIFT payments

In general, a SWIFT payment takes one to four business days to show up in the receiving bank account and the time taken varies depending on bank relationships, locations, and time of year.

Who uses SWIFT payments?

Examples of financial institutions, around the globe, that use SWIFT:

  • Banks
  • Depositories
  • Exchanges
  • Asset management companies
  • Money brokers

What is the difference between SWIFT and wire transfer?

SWIFT is the internationally dominant financial messaging system used by banks and other financial institutions. Banks can securely send international messages through the SWIFT system, including international wire transfer instructions. However, the SWIFT payment messaging system is not free and usually includes fees paid by the end customer via their banking provider.

SWIFT is the messaging network that manages the financial transaction instructional messages and the wire transfer is the action of moving the money between international financial institutions.


As we know, SWIFT is the Society for Worldwide Interbank Financial Telecommunication. IBAN stands for International Bank Account Number. Both SWIFT and IBAN are internationally recognised as methods to identify bank accounts when making an international payment. 

A SWIFT code is used to identify a specific financial institution during cross-border payments while IBAN is used to identify the specific bank account within that financial institution. To complete an international transfer, you must have both the SWIFT code and the International Bank Account Number. 

What other SWIFT services should I know about?

The SWIFT payment system is only one aspect of the Society for Worldwide Interbank Financial Telecommunication and what they provide financial institutions. The SWIFT system also offers services that support corporations and individuals. Below are some of the SWIFT services that you should know about:


SWIFT provides access to a variety of applications for financial institutions and transactions. This includes applications like real-time instruction matching for treasury, securities market infrastructure for processing, and infrastructure to support processing payment instructions between banks. 

Business intelligence

SWIFT offers business intelligence tools like dashboards and reports for clients to use to have a real-time view of the financial messages coming in and going out at any given time. 

Compliance services

To support current compliance standards, clients can work with SWIFT to gain access to reporting. SWIFT also offers utilities such as “Know Your Customer (KYC), Sanctions, and Anti-Money Laundering (AML).”

Messaging, connectivity, and software solutions

The SWIFT payment system needs to have smooth, secure networks and channels for financial messaging to travel. SWIFT has products and services to easily support end customers sending and receiving financial transactions.

Why do businesses need an international payment gateway?

Businesses need an international payment gateway to provide seamless customer payment experiences in a globally connected economy. Companies that provide international payment gateways give their customers a secure way to process cross-border payments. 

Also, having an international gateway opens up your business to a bigger market, enriching your customer base. 

SWIFT and ecommerce payments

With the connectivity that SWIFT provides for the global economy, there are scalable use cases for SWIFT payment processing beyond financial institutions. With the pandemic and increasing online transactions, giving customers international secure payment pathways is critical to remain competitive.

What is the SWIFT Pay Later API?

In 2019, SWIFT announced that they would be publishing a new API standard for the Pay Later payment process in collaboration with their financial institution members. This model gives end consumers a flexible payment option when they either don’t want to or can’t pay for a purchase upfront. This recent API allows consumers to pay in instalments rather than the entire cost of the item at the time of purchase.

Before we can dive into the gpi Link, it’s important to understand what gpi is. Gpi stands for global payments innovation. According to SWIFT, “gpi Link will seamlessly connect multiple trade platforms to gpi members, enabling gpi payment initiation, end-to-end payment tracking, payer authentication and credit confirmation.” 

This link will provide continuous monitoring of payments within the payment system and also support APIs. With this link, financial institutions should be able to deliver better customer service, cut operational costs, and reduce cross-border friction. 

Distributed ledger technology (DLT) is the technology infrastructure that enables access and validation within large networks with many locations. Within the proof of concept for the SWIFT gpi link, SWIFT worked with a company called R3 and their platform Corda to map out and test how they could enable DLT within their payment system. 

While DLT still needs to mature as a technology, there has been headway in using DLT for the automated portions of banking and cross-border payments. 

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