If you have ever done an international money transfer, it is a sure thing that you have heard about “the SWIFT network”. So, for your better understanding of the term, let us dive deep in so that the next time you do an international money transfer it is no longer a financial jargon but a familiar word for you.
SWIFT (The Society for Worldwide Interbank Financial Telecommunication) is a global network connecting all banks in the world to communicate data on financial transactions systematically. It is an electronic payment messaging system that is used to communicate money transfers between two banks situated in two different countries.
So, now you know the simplest definition of SWIFT, let’s know how it works!
SWIFT network assigns an eight- or 11-character long code to each bank, known as the bank identifier. This code is quite similar to the IFSC code used for domestic interbank transfers, but SWIFT code is used for overseas transactions.
For example, if someone in Australia wants to send money to a person in India via banks or remittance providers, they require the beneficiary’s bank account number and the SWIFT code of the destination bank. Through this communication network, the respective bank in India knows about the transfer in advance and makes arrangements to clear the transaction.
SWIFT code is seen operating across various financial markets, capital markets, and banks. Although it was initially made to facilitate transactions, its flexible messaging format spread its popularity and usage among other sectors. Now, SWIFT code is prevalent in:
- Banks
- Securities Dealers
- Clearing Houses
- Exchanges
- Corporate Business Houses
- Depositories
- Treasury Market Participants
- Foreign Exchange & Money Brokers
Let us take an example of a SWIFT code and see what it means.
IDIBINBBMAS- This is how a SWIFT code looks!
- The first four characters of the code denote the name of the bank, IDIB – Industrial Development Bank of India or Indian Bank
- The next two characters stand for the country code, which is IN for India in this case.
- The next two characters stand for the location code, which is BB in this example.
- The last three characters are the branch code of the head office, which is MAS – Madras here.
The best online money transfer in Australia uses SWIFT codes to facilitate accurate and seamless transactions across different banks in the world. SWIFT enables fast and cost-effective online money transfers across borders, direct from customers’ bank accounts to the beneficiaries’ bank accounts.
