How SWIFT works

October 15, 2020
Whenever you send money overseas using bank transfers, the transaction is made possible by the Society for Worldwide Interbank Financial Communications (SWIFT) system.

Before we had SWIFT, Telex was the only available means for banks to communicate international money transfers. Telex used a free message format which made it both slow to process and open to many human errors. The six international banks that formed SWIFT in 1973 aimed to improve that.

Within the first few years, SWIFT membership increased to over 200 banks across 7 countries. Today, there are over 11,000 SWIFT member institutions across 200 countries that are part of this information network, and together they send over 37 million transactions across borders.

Breaking down the SWIFT Code

SWIFT is essentially a messaging network that connects all the world’s banks and other financial institutions to receive information quickly and securely, such as instructions to send money overseas. Members of SWIFT pay annual fees for network maintenance and typically those costs are passed on to the individuals sending and receiving money using SWIFT codes.

Every financial organisation in the SWIFT network is assigned a unique code that consists of 8 or 11 characters. The SWIFT Code is also referred to as the bank identifier code (BIC) or SWIFT ID. Each character in the code has a meaning:

  • The first four characters are the bank codes, defining the organisation
  • Next two characters are the country codes
  • The next two characters are used for location or city codes
  • The last three characters are optional, which are used to define the branch code

As an example, looking at the SWIFT Code for the Royal Bank of Canada based in Vancouver, ROYCCAT2VIC, we can now make sense of what each character section stands for.

You can find SWIFT codes for any of the organisations connected to the network here.

To complete an international money transfer, you will also need an IBAN code to identify the individual bank account involved in the transaction.

Send more than money.