What Is SWIFT and When Is It Used?

Key Takeaways

• SWIFT is a global messaging network that helps your money move securely across international borders 

• SWIFT codes act as your bank's international address, ensuring your transfer reaches the right destination 

• Knowing about SWIFT fees and money transfer alternatives like Xe can help you save money on your international transfers

If you've ever sent money abroad, you've likely used the SWIFT network – even if you didn't realize it. This global system works behind the scenes when you transfer money internationally, helping ensure your funds reach the right destination securely.

But what exactly is SWIFT? Why do banks use it? And are there times when alternatives might save you money? This article will explain everything you need to know about SWIFT codes, how they work, and when to consider other options for your international transfers.

What is SWIFT?

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the invisible network that keeps international money moving. Think of it as the global language banks use to talk to each other about your transfers.

When you send money abroad, SWIFT doesn't actually move your funds – instead, it carries the secure messages between banks that make transfers possible. This messaging system ensures your money's journey is tracked properly from start to finish.

How SWIFT began

SWIFT's story started in 1973 in Belgium¹, when banks faced the growing challenge of communicating securely across borders. When SWIFT went live with its messaging services in 1977, it replaced the outdated Telex technology that banks had relied on for years, introducing a more secure and standardized way to communicate.

What began as a modest network connecting 239 banks across 15 countries has transformed into the backbone of global finance. Today, SWIFT connects over 11,000 financial institutions in more than 200 countries, creating a standardized language that allows banks worldwide to communicate seamlessly about your money transfers.

What are SWIFT codes?

SWIFT codes serve as your bank's international address, directing your money to the right destination. Also known as BIC (Bank Identifier Code), these unique identifiers ensure your funds don't get lost in the global banking system.

Breaking down a SWIFT code

Every SWIFT code contains 8-11 characters that tell a specific story about where your money is headed:

AAAA BB CC DDD

• AAAA – Bank code: 4 letters that identify the specific bank

• BB – Country code: 2 letters showing which country the bank is in

• CC – Location code: 2 characters pointing to the bank's city or region

• DDD – Branch code: Optional 3 characters identifying the exact branch (if missing, it's usually the main office)

For example, BOFAUS3N² points to Bank of America (BOFA) in the United States (US), specifically in New York (3N).

How SWIFT codes improve your transfers

When sending money internationally, accuracy matters. SWIFT codes help your transfers in several important ways:

• Precision routing: Your money reaches precisely the right bank, even when multiple banks have similar names

• Fewer errors: The standardized format reduces mistakes that could delay your transfer or send funds to the wrong place

• Faster processing: Banks can handle transfers more efficiently when they all speak the same financial language

Where is SWIFT Used?

SWIFT operates in over 200 countries, making it the most widely used international banking network. Some of the largest users of SWIFT include:

Countries that rely on SWIFT:

• United States – Major financial institutions depend on SWIFT for global transactions.

• United Kingdom – London’s financial hub extensively uses SWIFT.

• European Union – SWIFT facilitates both euro-based transactions and international transfers.

• China – Chinese banks use SWIFT for international trade and business.

• India – A key player in global remittances and trade.

• Japan – One of the largest financial markets utilizing SWIFT for interbank communication.

• Australia – SWIFT plays a crucial role in cross-border payments.

When is SWIFT Used?

SWIFT is the global standard for secure banking communication. It’s commonly used for:

• International money transfers: When you send money to family overseas or pay for international purchases

• Business transactions: Companies moving funds between global accounts or paying international suppliers

• Currency exchange and trading: Banks and brokers executing foreign exchange and securities transactions

• Financial communication: Banks sharing critical payment details and verifying information with each other

Who relies on SWIFT?

The SWIFT network connects more than 11,000 financial institutions worldwide, including:

• Local and global banks

• Credit unions and building societies

• Investment firms and brokerages

• Central banks and government treasuries

• Multinational corporations with international payment needs

Virtually any organization that needs to move money across borders likely uses SWIFT in some capacity.

How Does SWIFT Work?

When you send money internationally, SWIFT acts as the messenger between banks, ensuring accurate transaction details. Here’s how the process works:

Step-by-step SWIFT transaction

1. You initiate a transfer at your bank, providing the recipient's details

2. Your bank creates a SWIFT message with precise payment instructions

3. This message travels through the SWIFT network to the recipient's bank (sometimes via intermediary banks)

4. The recipient's bank receives the instructions and deposits the funds into the correct account

Role of intermediary banks

Not all banks have direct relationships with each other. When sending money between banks without direct connections, intermediary banks act as go-betweens. While these middle banks help bridge the gap, they often charge additional fees that can reduce the amount your recipient receives.

Security and compliance

• SWIFT employs robust encryption and security protocols to protect your financial information

• All transactions must comply with international regulations and anti-money laundering requirements

Common SWIFT Codes and How to Find Yours

Many major banks have well-known SWIFT codes. Below is a table of commonly used codes:

Finding and using SWIFT codes

How to find your bank's SWIFT code

• Check your bank statement or online banking portal where account details are displayed

• Search your bank's website - most have a dedicated section for international transfers

• Contact your bank's customer support for confirmation if you're unsure

Using a SWIFT code for transfers

• Double-check all recipient details carefully before submitting

• Enter the SWIFT code exactly as provided - even one incorrect character can delay your transfer

• Verify all transfer fees upfront so you know exactly what you'll pay
  

SWIFT transfer fees: What you need to know

When sending money internationally through SWIFT, the costs can add up quickly. Understanding these fees beforehand helps you avoid surprises and keep more of your money where it belongs.

Types of SWIFT fees

1. Sending bank fees: Your bank typically charges a flat fee or a percentage of your transfer amount

2. Intermediary bank fees: Each bank that processes your transfer along the way may deduct its own fee from the amount

3. Receiving bank fees: The final bank may charge the recipient for accepting the international payment

How to reduce SWIFT fees

• Compare rates from different providers before sending your money

• Ask your bank if they offer fee discounts for online transfers or for account holders

• Consider alternative money transfer services like Xe, which typically offer lower fees and better exchange rates than traditional banks

Alternatives to SWIFT

While SWIFT is the most widely used network, other systems exist for different types of transactions.

Alternative Payment Systems

• SEPA(Single Euro Payments Area): European transfers with lower fees and faster processing times.

• Fedwire & CHIPS (Clearing House Interbank Payments System): U.S. domestic transfer systems.

• Cryptocurrency & Blockchain: Decentralized payment networks like Bitcoin and Ripple

• Real-Time Cross-Border Networks: Emerging fintech solutions reducing reliance on traditional banking infrastructure.

Making SWIFT Transfers with Xe

SWIFT remains the most trusted system for international bank transfers. Whether you’re sending money abroad for personal or business reasons, understanding SWIFT can help you confidently navigate global payments.

At Xe, we make SWIFT transfers simple and cost-effective, helping you send money securely to bank accounts worldwide. With competitive exchange rates and transparent fees, you can trust Xe to handle your international transfers with ease.

Start your SWIFT transfer today at Xe.com and save on international transactions.

Citations

¹ SWIFT History - SWIFT - 2025 

² Bank of America SWIFT Code - Bank of America - 2025

³ JPMorgan Chase SWIFT Code - Chase - 2025 

⁴ BMO Harris Bank SWIFT Code - BMO Harris- 2015

⁵ HSBC Bank SWIFT Code -HSBC Bank - 2025

⁶ Citi Bank SWIFT Code - CitiBank - 2025

⁷ Capital One SWIFT Code - Capital One-2025

**The information from these sources were taken on March 21, 2025. 

The content within this blog post is not intended for use as financial advice. This content is for informational purposes only. Different currency exchange amounts, currency types, dates, times, and other individual factors will result affect the delivery times of transactions, rates and comparative savings.