SWIFT (Society for Worldwide Interbank Financial Telecommunication)
Quick Answer
SWIFT is a global messaging network that banks and financial institutions use to securely communicate transaction instructions for international wire transfers.
Definition
SWIFT is a global messaging network that banks and financial institutions use to securely communicate transaction instructions for international wire transfers.
Explanation
SWIFT does not transfer money itself — it provides a standardized messaging system that enables banks to communicate transfer instructions securely. When you send an international wire via SWIFT, your bank sends a SWIFT message to the recipient's bank with payment instructions. The actual movement of funds happens through correspondent banking relationships.
SWIFT transfers are secure and widely available (11,000+ institutions in 200+ countries), but they can be slow (1-5 business days) and expensive. Costs typically include an outgoing wire fee, intermediary bank fees, and incoming wire fees. These fees can total $25-50 per transfer, plus an unfavorable exchange rate.
Each bank has a unique SWIFT/BIC code (8-11 characters) that identifies it for international transfers. You need this code along with the recipient's IBAN or account number to initiate a transfer.
Example
To send money from a French bank to a US bank, the sender provides the recipient's SWIFT code (e.g., BOFAUS3N for Bank of America) and account number. The transfer takes 2-4 business days with typical fees of $30-50.