What is the ‘SWIFT’ in banking?

2 years ago   •   .4 min read

.By İlayda Birol
.Table of contents
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a secure messaging system used by financial institutions worldwide to securely exchange information and instructions related to financial transactions.

If you have ever sent money overseas, then chances are you will have come across a SWIFT code. These codes are used by banks to facilitate international money transfers and help businesses, individuals and companies send and receive payments quickly and securely. In this article we have explained what SWIFT codes are and why they are important for business owners.

What is Swift?

SWIFT is a global payment network used by financial institutions to securely send and receive information, such as money transfer instructions. It stands for the Society for Worldwide Interbank Financial Telecommunication. The organization was founded in 1973 to create a standard for communication between banks, and it has since become a critical part of the global financial system. SWIFT codes are used to identify banks and financial institutions, and are often used in the process of sending and receiving international wire transfers.

A SWIFT code is made up of 8-11 characters that help identify the country, bank and branch of the account you are sending your money to. This code is necessary for businesses that make international money transfers as it helps them get their money to its destination faster and easier.

Is there a difference between BIC and SWIFT codes?
You can find answers to all your questions about swift code, the difference between Swift code and BIC, and everything about banking on the wamo blog.

Which Countries are in the SWIFT network?

SWIFT is a global network that is used by financial institutions around the world, so it is present in most countries. It is used by banks, credit unions, securities, and other financial institutions to send and receive information and instructions for financial transactions. Some examples of countries where SWIFT is used include the United States, Canada, Mexico, Brazil, the United Kingdom, France, Germany, Italy, Spain, Turkey, China, India, Japan, South Korea, Australia, and many others.

The SWIFT code consists of 4 parts.

The SWIFT code consists of 4 parts.

  • The institution code or bank code which is always 7 characters long and is used to identify the bank that holds the account and where you want your money to be sent.
  • The country code, which identifies where a particular branch is located in a country and it's always 4 characters long.
  • The location code, also known as sorting code or transit routing number (TRN), it identifies individual branches within a country. This can be 6 or 11 digits long depending on how many branches there are in one specific location. And finally,
  • A branch identifier at the end of the SWIFT code is optional but some banks do use it when sending out notifications regarding payments made by their customers.

These 4 parts help to identify the country, bank and branch that the payment is going to.

Swift Codes are comprised of the following parts:

  • Country Code
  • Bank Code
  • Branch Code (optional)

1) The Institution Code or Bank Code

The first 2 characters of a SWIFT code are the institution code or bank code. The institution code is assigned by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and is used to identify the bank that is sending or receiving the payment.

2) the Country Code

The country code is two letters and these are not case sensitive, so you can use all capital or lowercase letters.

The Country Code abbreviation (CC) is only the first letter of the 2-letter ISO 3166-1 alpha-2 country code, which is itself an abbreviation for International Organization for Standardization (ISO). The second letter of the two-letter code is called subcode and indicates a specific subdivision in that country. For example: US - United States Japan - Japan

3) the Location Code

The location code is the second most important part of a swift code, following the BIC. The location code identifies the country, region and city and can be found in the first 2 digits of a swift code.

The three-letter abbreviations for countries are as follows: US – UALA Canada – CAU2

4) and the branch code (optional)

The Swift code consists of 8 characters for BIC and 10 characters for IBAN. The first 4 characters are the bank's own code (BIC), followed by a space, then 9 digits (IBAN), followed by another space and 2 extra digits. The first 4-character code is known as “bank identifier code” or BIC, while the second part (9 digits) is called “international bank account number” or IBAN.

The branch code can be left blank if it's not known or needed to identify the location of an account within a bank.

We hope this article has helped you to understand what a SWIFT code is and what its used for!


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