SWIFT (Society for Worldwide Interbank Financial Telecommunication)
What is SWIFT?
SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is a global member-owned cooperative that provides safe and secure financial transactions for its members. It's primarily used for international wire transfers and messages between banks.
Explanation:
SWIFT doesn't transfer funds but instead sends payment orders between institutions' accounts, using standardized codes to process transactions securely and efficiently. It’s essential for global financial communication.
Practical Example of SWIFT:
A business in the UK sends a payment to a supplier in Japan. The transaction is carried out using SWIFT, with each bank identified by a unique SWIFT code, ensuring the money is securely transferred between the banks.