What is a SWIFT code?

If you've ever made or received an international payment, you’ve probably heard of a SWIFT code. In the world of global finance, SWIFT codes are crucial for identifying financial institutions and ensuring secure and efficient cross-border transactions. But what exactly is a SWIFT code, and how can they help businesses make payments to overseas employees and suppliers? 

In this blog post, we'll break down everything you need to know about SWIFT codes, from how to find and verify them to how you can use them to make international payments securely.

What is a SWIFT Code?

A SWIFT code, also known as a Business Identifier Code (BIC), is a unique identification code assigned to financial institutions around the world. The code is eight or eleven characters long, and these characters are used to identify the bank or financial institution and its location. 

Here’s the breakdown of what these characters represent:

• The first four characters of the code represent the party prefix (bank code), 

• Followed by two characters for the country code, 

• And two characters for the party suffix (location code). 

• If the bank has an optional branch identifier, it’s represented by the final three characters.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is the global messaging system used by banks and financial institutions for secure communication and cross-border payments. 

The SWIFT network facilitates the exchange of information and messages between banks, including SWIFT codes, allowing international transactions to be completed efficiently and securely.

Read more: What is Swift?

Why are SWIFT codes important?

The primary purpose of a SWIFT code is to identify financial institutions and ensure that international payments are directed to the correct bank or financial institution. SWIFT codes are crucial in facilitating cross-border transactions and ensuring that international payments are processed securely and efficiently.

As well as identifying the bank, a SWIFT code can also provide additional information about the bank's location and the specific branch where the account is held. This information can be used to verify the bank's authenticity and make sure the payment is directed to the correct account.

How to find a SWIFT code

If you need to make an international payment or pay an international invoice, you'll need to obtain the SWIFT code for the recipient's bank or financial institution. You can typically find a SWIFT code on the recipient's bank statement or by contacting the bank directly. 

You can also use online resources such as the SWIFT online directory or third-party websites that provide SWIFT code lookup services.

Using a SWIFT code checker

A SWIFT code checker is an online tool that lets you verify SWIFT codes, so you can ensure the SWIFT code you’re using is valid and corresponds to the correct financial institution before making an international payment. 

Once you’ve entered the SWIFT code in question into the checker, it will provide you with information about the corresponding bank, including its location, branch details, and BIC code.

Using a SWIFT code checker is important because incorrect information can lead to delays or even failed transactions. If the SWIFT code is incorrect or invalid, your payment may not reach its intended destination, and you may incur additional fees or charges. So, to avoid any potential issues, it’s crucial to use a reliable and reputable SWIFT code checker to double-check the accuracy of the SWIFT code before making any international transactions.

Several financial institutions offer their own SWIFT code checkers, and there are also independent online tools available. 

Using a SWIFT code for international payments

When making an international payment, you'll need to provide the recipient's SWIFT code along with other necessary information (such as the recipient's account number and name). 

The SWIFT code ensures that the payment is directed to the correct financial institution and account. The information is transmitted through the SWIFT network, where it is securely processed and routed to the recipient's bank or financial institution.

The processing time for international payments can vary depending on various factors, such as the country and banks involved. Typically, international payments can take between 1-5 business days to be processed, but they can take longer depending on the complexity of the transaction and any delays that may occur during processing.

Making SWIFT payments with confidence

In summary, a SWIFT code is a unique identification code assigned to financial institutions around the world. The code is crucial in facilitating international payments and ensures that payments are processed securely and efficiently. 

If you need to make an international payment (for example, when managing a remote payroll), you'll need to obtain the recipient's SWIFT code and provide it along with other necessary information when submitting the payment. 

Understanding what a SWIFT code is and how it works is essential for anyone involved in cross-border transactions. Whether you're a business owner, investor, or individual, knowing how to use SWIFT codes can help ensure that your international payments are processed efficiently, securely and swiftly every time.