SWIFT

SWIFT: a network through which banks in different countries send each other payment messages. The name is short for Society for Worldwide Interbank Financial Telecommunication. The society has operated since 1973, is registered in Belgium, and banks from almost every country are connected to the network.

How it works

SWIFT transmits messages, not money. The sender’s bank sends the correspondent bank an instruction: to whom, how much, in which currency. The money moves through correspondent accounts. Each bank in the network is identified by a BIC code.

For a long time, the customer payment message was called MT103. The network is moving payment messages to the ISO 20022 standard: it has more fields, and data on the payer, the beneficiary and the purpose are transmitted more fully. Out of habit, “MT103” is still used as a synonym for payment confirmation. Each payment has its own UETR number, which lets banks see where the payment is in the chain.

Where it comes up in a payment

An importer sees SWIFT in two places. First: the supplier’s invoice shows the SWIFT code of its bank, and sometimes of an intermediary bank. Second: after payment, the supplier often asks for a “SWIFT copy”, that is, a copy of the payment message as confirmation that it was sent.

What to watch for

Some Russian banks are disconnected from SWIFT, and other routes are affected by restrictions in the correspondent chain. So a payment from Russia goes along the paths that work on the payment date, and these paths change. For messaging within the country and with some foreign banks, there is SPFS.

Check the intermediary bank’s details if the invoice names one: without it, the payment may come back.

Selecting a working route for the supplier’s country, currency and bank is part of a broker’s job. More on the Route selection page.