With the help of a SWIFT transfer, you can make transactions in any currency and to any bank in the world. However, its implementation takes longer than a regular online transfer, on average about 3 working days. It is not always possible to determine the cost of a transfer in advance, since it depends on how many banks will act as an intermediary in a particular transaction. And most importantly, SWIFT does not solve the problem of small transfers. As you can see, SWIFT transfers have disadvantages, which we will discuss in more detail in this article.
What Is SWIFT Transfer?
The term SWIFT Transfers comes from the name of the Society for Worldwide Interbank Financial Telecommunications, founded in 1973. Initially, it included more than 200 banks from 15 countries. The main purpose of its creation was mutual, close cooperation, and exchange of information between banks. Today, the SWIFT international payment system unites more than 8000 institutions from 208 countries. The Association acts as an intermediary in banking, brokerage, and stock transactions.
SWIFT payment is a transfer that will allow you to make a payment in any currency to any bank and country around the world. Also, a SWIFT transfer abroad is carried out in foreign currency. It is used to transfer money to countries outside the European Union, but that does not mean that you can not send funds between EU member states with the help of it.
Find out how to transfer funds using SWIFT step by step. You should submit the following information to the bank where you have an account:
- personal data of the transfer recipient, that is, the person or institution to whom you intend to send money in foreign currency;
- beneficiary’s bank account number – required in IBAN format;
- beneficiary’s bank SWIFT code (BIC code);
- purpose of transfer;
- the amount of the transfer in the currency of sending or receiving.
A SWIFT code is an internationally unique alphanumeric code assigned to a specific banking institution, consisting of letters and numbers, 8 characters long, but you can also come across codes consisting of 11 characters. In the case of longer SWIFT codes, the last three additional characters are used to identify a specific bank branch. However, the SWIFT code mainly consists of the following:
- The first four characters are the unique identifier of the banking institution.
- Two consecutive characters are the country code according to the ISO 3166-1 standard.
- The next two characters are the location code.
When transferring money in foreign currency, you must enter the SWIFT code. It is used to identify banks or other organizations that are members of the entire SWIFT system. This allows financial transactions to be carried out more efficiently and mainly automatically. The SWIFT code is required when transferring between two different countries.
SWIFT Payment Disadvantages
- Making a money transfer takes a long time.
Standard SWIFT transfers are much slower than, for example, SEPA or Perekaz24. However, it does have the option of paid acceleration, which greatly increases its capabilities.
- Standard (D + 2) – the money transfer is received two days after it was sent.
- Urgent (D + 1) – the money transfer comes one day after it was sent.
- Express (D + 0) – the transfer is carried out on the same day.
- The high cost of money transfers.
We will literally have to pay a high price for the wide availability of SWIFT transfers. The cost here is incomparably higher and is most often defined as a percentage of the transfer amount, but with a minimum and maximum value. These values are set differently for each country.
In addition, there are costs of the so-called intermediary banks, which can amount to several tens or several hundred hryvnias or euros. Who pays this cost depends on the chosen split option (this decision always remains with the person who orders the transfer).
Thus, the fee is rather big for a SWIFT transfer; whereas using the Perekaz24 transfer system, you can make instant transfers for a small fixed fee, and make the first transfer absolutely free of charge.
What Else Should I Know About Currency Transfers?
There are the following cost-sharing options:
- OUR – all costs are covered by the sender of the transfer;
- BEN – all costs are covered by the recipient of the transfer;
- SHA – costs are divided between both parties: senders pay the fee of their bank, the remaining costs (the recipient’s bank and intermediary banks fee) are covered by the recipient.
Banks may charge a fee not only for sending but also for receiving a foreign transfer.
If the sender provides incorrect data for the transfer (and, thus, the transfer won’t reach the recipient), he will be charged additional costs by banks to clarify the recipient’s details.
If you want to send money within Poland, in this case, SWIFT transfers also have disadvantages. A transfer of foreign currency between two Polish banks is also considered a transfer abroad (this is especially important for SWIFT transfers – then the money goes through an intermediary bank outside Poland, and therefore there are additional costs).