Last update: 07/10/2022
These combinations of 8–11 numbers and letters enable banks to communicate with each other. Here we tell you what SWIFT means, what information it contains, how it works and where you can find it.
Also known as Bank Identifier Code (“BIC”), SWIFT is short for “Society for World Interbank Financial Telecommunication”. The organization was founded in Brussels (Belgium) in 1973 to enable international communication among banks so they could order and receive transfers beyond their borders by way of a common messaging platform, language and computer system that verified payments, cash, foreign exchange, trade finance and custody. Today, SWIFT is a cooperative that provides encrypted messaging services to more than 11,000 financial institutions.
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Why does it matter?
SWIFT enables financial institutions to communicate with each other about the international transfers and other services they perform. Without it, large companies, SMEs, sole traders and individuals would face difficulties when ordering and receiving money from bank accounts in other countries. For instance, if someone in Spain wants to send funds to a relative in Mexico, they will need the SWIFT code to identify the receiving bank, plus the recipient’s name, address, account number and other information.
The naming conventions and encryption SWIFT uses to authenticate movements afford significant transaction security. Transactions are also faster than before because it can process a high rate of international transfers in less than 30 minutes and on the same day, thanks to new standards such as SWIFT gpi (Global Payment Initiative).
What is in a SWIFT code?
Each bank has a unique SWIFT code. It usually consists of 11 characters divided into four groups: first, four letters to identify the bank; second, two letters to identify the country; third, two letters to indicate the bank’s location; and fourth (which is optional), three digits to specify the receiving branch.
For Santander, ‘BSCH’ is the bank identifier, ‘ES’ corresponds to Spain, ‘MM’ is for Madrid, and ‘XXX’ indicates that the branch will settle the transaction centrally.
How are the SWIFT code and the IBAN different?
While many people can’t tell the difference between the SWIFT code and the IBAN, it’s rather straightforward. The SWIFT code identifies a bank, and the IBAN (which stands for International Bank Account Number) identifies an account. The IBAN can certify a bank account anywhere in the world through a unique code of up to 34 characters (numbers and letters) that include the country, institution, branch and the actual account number.
How can I find out my bank’s SWIFT code?
Most banks include their SWIFT code in customer account details and on their mobile apps, websites and statements. Otherwise, you can request it at your branch.
You can find the bank’s SWIFT/BIC code or an IBAN on some websites. Simply enter the conventional number of the account on websites like Santander’s in Spain and the United Kingdom, and a tool will provide the code.
As a financial technology enthusiast and expert in banking and international financial transactions, I've acquired comprehensive knowledge about various systems and protocols facilitating global money transfers, including SWIFT (Society for Worldwide Interbank Financial Telecommunication) and the associated concepts such as SWIFT codes and IBANs. My expertise spans understanding the operational mechanisms, security measures, and the significance of these protocols in the seamless functioning of international financial transactions.
Let's delve into the concepts mentioned in the article:
SWIFT (Society for Worldwide Interbank Financial Telecommunication)
SWIFT is an acronym for the "Society for Worldwide Interbank Financial Telecommunication." Established in 1973, it serves as a global messaging network that enables financial institutions worldwide to securely and efficiently communicate and conduct various financial transactions, including fund transfers, cash management, foreign exchange, trade finance, and custody services. With more than 11,000 member financial institutions, SWIFT facilitates standardized communication protocols, ensuring secure and standardized messaging across borders.
SWIFT Code (BIC - Bank Identifier Code)
A SWIFT code, also known as a Bank Identifier Code (BIC), is an alphanumeric code comprising 8 to 11 characters. It uniquely identifies a particular bank and its branch in international transactions. The code structure typically consists of four components: first, four letters identifying the bank; second, two letters representing the country code; third, two letters specifying the location code; and optionally, three digits indicating the branch code. It assists in accurately directing funds to the intended recipient's bank during international transfers.
Importance and Working of SWIFT
SWIFT is crucial for facilitating communication and enabling secure international transfers among financial institutions. Without SWIFT, cross-border transactions for individuals, businesses, and organizations would encounter significant hurdles. It employs robust encryption and standardized messaging protocols to ensure the confidentiality, authenticity, and integrity of financial transactions. SWIFT's introduction of initiatives like SWIFT gpi (Global Payment Initiative) has enhanced transaction speed, allowing for same-day processing of international transfers.
IBAN (International Bank Account Number)
The IBAN, or International Bank Account Number, differs from the SWIFT code. While the SWIFT code identifies the bank, the IBAN serves as an internationally recognized account identifier. Comprising up to 34 alphanumeric characters, the IBAN includes a country code, institution code, branch code, and the specific account number. It uniquely identifies individual bank accounts worldwide and is used to verify and process international payments accurately.
Finding a Bank's SWIFT Code
Banks usually provide their SWIFT codes in customer account details, mobile apps, websites, and statements. If not readily available, individuals can request the SWIFT code from their bank branch. Additionally, certain online tools or banking websites allow users to find a bank's SWIFT/BIC code by entering the account number.
Understanding these concepts is crucial for anyone involved in international transactions, ensuring accurate and secure fund transfers across borders.
