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SWIFT: How it Works

kokou adzo



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SWIFT is a way for banks in different countries to send and receive money. It takes the place of other ways to talk to people and makes it easier to send private messages with information about money transfers. Come with me as we learn how SWIFT works.


What is SWIFT?

SWIFT money transfer has been around since 1973. Finance companies from different countries got together at that time to find a quick and safe way to share information. It used to be that payment information was sent by mail and telegraph, but as the number of transactions grew, it became inconvenient to use these methods. In 1977, the first SWIFT payment was made. Today, more than 200 countries are connected through the system. 


Now the central office of the organization is located in Belgium. It also has representative offices in other countries. They are responsible for payment processing in their geographical area:


  • Department in the United States handles the transatlantic zone;
  • Department in the Netherlands is responsible for servicing European payments;
  • Department in Switzerland – reserve, it can receive information from any country.

How SWIFT works

To send money between two banks, they don’t need to be linked. There are a lot of correspondent accounts in SWIFT. If two banks want to work together, they can open these. With the unified messaging method, bank A can tell bank B to send money to bank C. So, the transfer involves more than just the sender and the receiver. It also involves the banks that are connected.


A special terminal is set up so that the bank can send and receive messages from other businesses. The terminal sends data to a unified computer. The data then travels to a regional hub and is sent to all the participants. During the process, messages are checked, and the next step can only happen after confirmation.


A SWIFT code is a unique number that is given to each person who is exchanging data. It’s only used to send money between countries through the system. There is a place on the bank’s website where you can see the code and its details.


You don’t even need to open an account to make a SWIFT transfer. There is only a need for bank codes on both sides and the recipient’s passport information. After that, the money can be taken out of any organization that is part of the system. The transfer can take up to a week, but it must be done in at least one day.

Advantages, disadvantages, and analogs of SWIFT

SWIFT is the best way to send large amounts of money. It is mostly used by businesses that do business with other countries. You can send any amount, and the commission is always a small amount.


Some problems with the system are that the fees aren’t stable, and you can’t send money to all countries or in all currencies. Users also say that the time may go up if the routes for sending money are complicated. For instance, if there are a lot of middle-level banks or if you need to change currencies. The time it takes to process payments is going up because each bank has to wait for the other banks to check and confirm the transaction.


Many countries are making their systems for sending messages between banks. They’re based on the same idea as SWIFT. Similar systems are not as easy to use because there are not as many people involved. The biggest systems that work like SWIFT and are used in different countries are listed below:


  • INSTEX. Established to conduct trade transactions with Iran;
  • CIPS. Chinese counterpart for yuan payments;
  • SEPA. Alternative for EU countries, settlements are made in euros.


Not just because they don’t want to be cut off from SWIFT, some countries use other options. The main goal is to keep payments from being tracked and made public. Because of this, similar systems are already in place and are being built for exchanging messages between banks. But right now, SWIFT is still the most advanced and well-known system.

Kokou Adzo is the editor and author of He is passionate about business and tech, and brings you the latest Startup news and information. He graduated from university of Siena (Italy) and Rennes (France) in Communications and Political Science with a Master's Degree. He manages the editorial operations at

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