What is SWIFT code ? How does it work ?

What-is-SWIFT-code ? How-does-it-work ?

What is SWIFT code ?

Society for Worldwide Inter-bank Financial Telecommunication commonly known as SWIFT. It is a secured network for communication between the banks and financial organizations. SWIFT is also known as BIC or Bank Identifier Code. SWIFT codes play a significant role in various types of bank transactions. Basically in case of international transactions there are no alternatives to SWIFT. 

SWIFT code is eight to eleven digit codes that includes the following components:-

  • First four characters signifies the bank. Only letters are used here. 
  • The next two characters are used to identify the country.
  • The next two characters are used to identify the location. It is generally a combination of letters and numbers.
  • The last three characters are optional and it is used to identify the branch of the bank. 


Major Data Centers 

Presently SWIFT is mainly run  from two redundant data centers located in the United States and Netherland. These data centers share information on a real-time basis.  Recently SWIFT has also opened its new data center in Switzerland. 

Services SWIFT provides 

There are four major services SWIFT is currently providing: 
  1. Securities
  2. treasury & Derivatives
  3. Trade Services
  4. Payments and Cash Management.

How does SWIFT work? 

Banks around the world need an uniform standard to send and receive money from one country to another. The SWIFT became the answer. The organization established in 1973 in Brussels to set that uniform standard of financial transactions. It is a secured network that is used by more than 10000 financial organizations. 

SWIFT does not physically transfer any fund, only transfer the instruction of payment. Upon getting instruction the correspondent bank completes the further process. 

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