Home SWIFT/BIC Codes How do SWIFT payments work?

How do SWIFT payments work?

In our guide to BIC/SWIFT codes we outlined all the information you will need to make an international money transfer via the SWIFT network. This page will provide an overview of how the SWIFT system works, detailing the crucial factors which play a role in transferring money from A to B and looking at the common misconceptions associated with this global service.

Updated: 06/05/2021
Read time: 3 minutes
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What is a SWIFT payment?

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications and these kind of payments refer to transactions processed via the SWIFT network. Payments can range from direct deposits to international bank transfers, all of which are transported via SWIFT’s global financial messaging network.

Let's talk about SWIFT codes

For a better understanding of why and how these codes are used, what purpose they serve and when the network was first established, check out our comprehensive guide to all things SWIFT codes.

Who uses the SWIFT network?

Each year an estimated 5 billion messages relating to financial transactions are delivered around the world via the SWIFT network. These messages are sent by banks and other financial institutions in over 200 countries and territories. With almost 50 years of experience, the SWIFT network is deemed a reliable and safe method for delivering details about various corporate payments. 

How do SWIFT payments work?

When a payment is made via the SWIFT network, messages are passed between banks (as well as non-bank financial corporations) is a secure, encrypted way. Funds are not physically transported via the SWIFT network, only the instructions, and this communication facilitates the money transfer.

For example: When Bank A wants to send money to Bank B, a message with the instructions will be delivered, via the SWIFT network, from Bank A to Bank B. This message will be reviewed by Bank B before a debit or credit pay out is issued. At no point during this process is SWIFT responsible for the physical transference of any funds, the network simply transfers the messages. 

Correcting common misconceptions

Many people wrongly assume SWIFT is a money transfer network. However, the SWIFT network does not in fact transfer money, it is simply a messaging network utilised by financial service providers globally. The role SWIFT plays is one of recognition; once the banks have recognised the money transfer instructions, the payment will be issued.

Are SWIFT payments safe and secure?

Due to SWIFT’s crucial role in facilitating international money transfers, the network has frequently been under attack, targeted by cyber threats and data hacks. Over the course of SWIFT’s history, there have been many attempts to infiltrate money in a bid to disrupt transfers.

However, as a global cooperative founded in 1973, SWIFT have continued to adapt and respond to change, by developing sophisticated data encryption which protects and guarantees the delivery of 99.9999% messages. The society also implement further measures such as audit tracking and intrusion detection as a way of ensuring confidentiality and integrity of all data passing through the network. 

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