What Does a SWIFT Code Mean?
SWIFT Code (Society for Worldwide Interbank Financial Telecommunication) is a code used to identify a bank and the country in which it is located, consisting of 8 to 11 characters. This code enables large companies and individuals to securely perform international money transactions.
The characters that form the SWIFT code are:
- Bank code – consists of 4 letters and represents the abbreviated form of the bank’s name;
- Country code – consists of two letters and shows the country where the bank is located;
- Location code – made up of 2 letters or 2 digits and indicates the main location of the bank;
- Branch code – 3 digits are used to indicate a branch of the central bank; this is optional.
Although most banking institutions use SWIFT codes to transfer money, SWIFT is not a bank, but a system that ensures communication between these banking institutions.
In this sense, a logical question arises—when is the SWIFT code necessary?
The answer is very simple: the SWIFT code is required for performing international bank transfers, meaning transfers to people abroad or deposits to international bank accounts.
Furthermore, it is important to avoid confusion between the SWIFT code and the IBAN code. As mentioned, the SWIFT code is used to identify the bank during a transaction, while the IBAN code is used to identify the account holder during the transaction.
What Is a SWIFT Transfer?
The usefulness of the SWIFT code lies in the need for secure transactions, especially considering the frequency of online banking transfers. At any moment, various money transfers occur between individuals across the globe, many of which are international.
Transfers processed through the SWIFT communication system are considered the most secure methods of carrying out transactions, and banking operations include:
- Bank transfers;
- Transfers resulting from interbank transactions – all transfers made from one account to another;
- Management of letters of credit – a financial instrument through which a bank commits to paying a seller for goods or services provided;
- Issuance of account statements for individuals requesting these documents.
The time required to process SWIFT payments is typically between 2 and 5 business days. The time to complete the transaction also depends on the time zone of the country to which the money is sent, so it may vary and exceed the standard duration.
Moreover, depending on the internal regulations and policies of the bank, fees may apply for SWIFT transfers, with the amount varying from one financial institution to another. Additionally, while funds are in transit to the recipient, intermediary banks may apply additional processing fees. Therefore, it is important to contact your bank’s representatives to obtain all details regarding applicable commissions.
In conclusion, the SWIFT code is used for international transactions. This system is mainly used in the European Union, but many other countries that do not use this financial system still recognize it and process payments originating from the SWIFT network.