When arranging a money transfer – domestic or international – your sending provider should clearly explain what details are needed to ensure speedy and secure delivery. However, we want to equip our readers with all the necessary information ahead of time, to avoid any mistakes or confusion later down the road.
SWIFT code vs routing number: what is it?
SWIFT codes are used when a sender is transferring funds to an international recipient in another country. The codes contain specific details about the receiving financial institution and this information is communicated via the secure SWIFT (Society for Worldwide Interbank Financial Telecommunication) network in order to verify where the funds should be deposited.
Routing numbers – also known as US routing numbers – identify which bank a payment needs to be sent to. The United States adopted this system of identification in 1910 and, to this day, they are still used by financial institutions when sending or receiving money.
SWIFT code vs routing number: what is the format?
SWIFT code formats can range from 8 to 11 alphanumeric characters and each of these is divided into 4 categories: address, country and branch number of the bank.
An example of a SWIFT Code: AAAABBCCDDD
AAAA: Bank code. These 4 letters usually look like a shortened version of the bank name
BB: Country code. These two letters represent the country the bank is in
CC: Location code. These two characters will indicate where the bank’s head office is located
DDD: Branch code. The last three characters will indicate the specific branch of the bank
Routing numbers are 9-digit codes that reference the bank location where the account was opened. They may also be referred to as an ABA routing number or a routing transit number (RTN). Unlike SWIFT codes, they are not divided into categories, they will simply appear as one long code without spaces.
An example of a routing number: 123456789
How do SWIFT codes and routing numbers work?
The SWIFT network facilitates the sending and receiving of secure messages between banks and financial institutions in order to complete payment instructions. Funds are not physically transported using the SWIFT network, instead, these codes simply relay payment instructions.
A routing number is used to identify where a financial institution is within the United States. Routing numbers are a crucial way of guaranteeing banks send and receive funds to the correct financial institution as per the transaction.
Where are SWIFT codes and routing numbers used?
More than 11,000 financial institutions use SWIFT codes to initiate international payments across 212 countries: these include banks, foreign exchange brokers, clearing houses, depositories, brokering institutes, trading houses and asset management companies.
If you are sending an international payment to a bank account in a foreign country, it is highly likely you will use a SWIFT code.
Routing numbers are used in the United States to identify where in the country a financial institution is located. The following is a list of when customers will use a routing number: sending money from the US to another country, making a payment over the phone or online, setting up a recurring direct deposit, and cashing a cheque.
Where can I find a SWIFT code or routing number?
You will find a SWIFT code on a bank statement, via online banking or by contacting the bank directly and asking for it.
You will find a routing number printed on a cheque, displayed in your online banking, on the bank’s website or by using a routing number generator.
Summary
Bank transfers are an expensive way of sending money internationally. Choosing an alternative transfer provider offers a better deal for domestic and international transfers. They have lower overheads and more efficient processes. Also, the money transfer industry is highly competitive, so you benefit from a better deal.
Examples of top-tier alternatives to bank transfers are Wise and Xe Money Transfer. They offer percentage-based fee structures that take just a tiny fraction of the transaction amount. This provides significant savings that make sending money internationally a cheaper process.
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April is a trained journalist and the Content Editor for MoneyTransfers.com. She has 10 years experience writing about a diverse range of subjects, from financial services to arts and entertainment. When she’s not writing about global remittances she can be found daydreaming about her next holiday abroad.