SWIFT (Society for Worldwide Interbank Financial Telecommunication)

What Is SWIFT? 

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. It is the world’s most widely used messaging system for securely transmitting financial transactions and communication between banks and financial institutions. 

Founded in 1973 and headquartered in Brussels, SWIFT replaced slower, less efficient systems like TELEX by introducing standardised transaction codes. Today, SWIFT serves more than 11,000 member institutions in over 200 countries, processing over $150 trillion in transactions annually. 

Importantly, SWIFT does not hold or transfer funds itself—it simply sends secure, structured payment messages between banks. 

How Does SWIFT Work? 

SWIFT acts as a secure communication protocol between financial institutions such as: 

• Banks 

• Brokerage firms 

• Securities dealers 

• Foreign exchanges 

• Asset managers 

Each member institution is assigned a unique SWIFT code, also known as a Bank Identifier Code (BIC). When a SWIFT message is sent, it notifies the receiving institution of a payment or transaction instruction. 

What Is a SWIFT Code? 

A SWIFT/BIC code consists of either 8 or 11 characters: 

• Characters 1–4: Bank code 

• Characters 5–6: Country code 

• Characters 7–8: Location code 

• Characters 9–11 (optional): Branch code 

This structure ensures accuracy and traceability, making it easier to identify and verify institutions involved in international transfers. 

Required Details for a SWIFT Transfer: 

To send funds internationally via SWIFT, you’ll need: 

• Recipient’s full name and address 

• Recipient’s bank name and address 

• Recipient’s account number (or IBAN, if applicable) 

• SWIFT/BIC code of the recipient’s bank 

Nostro and Vostro Accounts Explained 

When banks facilitate cross-border transactions, they often rely on Nostro and Vostro accounts to track funds. These terms describe the same account from different perspectives: 

• Nostro (“ours” in Latin): Your money held in another bank 

• Vostro (“yours” in Latin): Another bank’s money held in your bank 

These accounts help banks settle payments and maintain transparent accounting across borders. 

SWIFT Payment Processing: Two Scenarios 

1. Banks Have a Direct Relationship

If the sender’s and recipient’s banks have commercial accounts with each other: 

• The sender’s bank sends a SWIFT message with the payment instructions 

• Funds move directly between their accounts 

• The recipient receives the payment quickly (often same-day or next-day) 

2. Banks Use an Intermediary Bank

If there’s no direct relationship: 

• An intermediary bank (or more than one) facilitates the transfer 

• Each intermediary charges a processing fee, and the transaction may take 3–5 business days 

If currency conversion is involved, additional steps are required, potentially affecting exchange rates and total fees. 

Is SWIFT Fast and Cost-Effective? 

SWIFT transfers are secure and highly trusted, but not always fast or low-cost: 

• Standard processing time: 1–4 business days 

• Fees depend on the number of intermediaries, currency conversions, and processing charges (can range from $15 to $65+) 

While not the cheapest option, SWIFT remains the most widely accepted and reliable network for global business payments. 

Who Governs SWIFT? 

SWIFT is governed by a 25-member board of directors and is regulated by the G-10 central banks, which include: 

• United States 

• United Kingdom 

• Canada 

• France 

• Germany 

• Italy 

• Japan 

• Netherlands 

• Sweden 

• Switzerland 

Though neutral in nature, SWIFT must comply with EU regulations as it is incorporated under Belgian law. 

Why SWIFT Matters to International Business in 2025 

From mass payroll transfers to supplier payments, SWIFT is the backbone of modern global finance. It ensures: 

• Secure and standardised communication between institutions 

• Global reach for payments and settlements 

• Traceability and transparency in financial operations 

Without SWIFT, cross-border business would be slower, more expensive, and significantly less reliable. 

How TopSource Worldwide Helps with International Payments?

TopSource Worldwide supports growing businesses by simplifying global payroll and financial compliance. Our platform: 

• Integrates with secure networks like SWIFT for international transfers 

• Minimises transfer delays and currency conversion fees 

• Manages multi-currency payroll across 100+ countries 

• Supports businesses using Employer of Record (EOR) services to pay international teams 

Whether you’re managing global contractors or full-time international staff, TopSource Worldwide helps you move money across borders securely and efficiently. 

Final Word 

SWIFT isn’t just a payment network—it’s the standard for global financial communication. Understanding how it works empowers businesses to make informed choices, reduce transfer errors, and maintain financial control across borders. 

Trust TopSource Worldwide to guide you through every step of global payroll and financial compliance in 2025.