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SWIFT, short for Society for Worldwide Interbank Financial Telecommunication, has been the foundation of global financial messaging for over forty years. It handles billions of transactions worth trillions of dollars every day. However, evolution is necessary for the SWIFT payments network to stay relevant. It is for this reason that SWIFT Go, a new service targeting the needs of low-value, high-frequency transactions was introduced.
SWIFT Go will allow businesses of any size, from SMEs and freelancers, to enjoy the same level of trust and security the SWIFT network has given large institutions for many years while maintaining more predictable costs and faster processing times.
This article aims to explore key differences between SWIFT Go and traditional SWIFT systems, so users can better choose the right payment system.
SWIFT refers to the Society for Worldwide Interbank Financial Telecommunication, a global network for financial messaging used by over 11,000 financial institutions across the world. Since its formation in 1973, SWIFT has allowed banks and all other financial organizations to make secure and encrypted communication about transferring financial information. It is especially necessary for international payments and provides standardized systems to send payment instructions, trade details, and other financial messages.
SWIFT is at the head of global finance, acting as a bridge between institutions across borders. When a business or individual needs to send money internationally, SWIFT ensures that payment instructions are communicated securely between the sending and receiving banks, even if they are located in different countries. With such integrated financial networks, businesses, governments, and people can settle payments and conduct financial transactions on a global scale.
SWIFT Go is a modern enhancement to the traditional SWIFT network, specifically designed to make low-value, cross-border payments more efficient. SWIFT Go addresses the increasing demand for international low-cost payment solutions catering to businesses and individuals who need to send small sums of money across borders.
Unlike traditional SWIFT services, which are better suited for larger, high-value payments, SWIFT Go is focused on providing an accessible solution for smaller, more frequent transactions, without sacrificing the reliability and security that SWIFT is known for.
One of the key strengths of SWIFT Go is its fixed-fee-based structure, so businesses and end-users know upfront what they will pay for each transaction before it leaves their system. This eliminates the uncertainty that people often experience with traditional SWIFT payment systems, where fees often depend on the banks involved or the route taken by the payment. This eliminates surprises in terms of costs arising due to changing currency values and thus makes it possible to plan better for budgets in international payments.
SWIFT Go facilitates quicker payment processing times compared to usual SWIFT processing. Payments are usually processed within one to two business days; therefore, its primary purpose is to ensure that business operations run smoothly without delays. This speed is significant for SMEs and freelancers who may require instant transfers.
The SWIFT Go is built to be accessible to a wider segment of users- small and medium-sized enterprises, freelancers, and individuals who do not possess the same capability in managing cross-border transactions as larger corporates. SWIFT thereby expands its access beyond large businesses and financial institutions to democratize global payments.
Overall, SWIFT Go is the best solution for making cross-border payments easier, faster, and even more transparent for business as well as individual use. By combining the power and the security of the SWIFT network with new functionality that specifically addresses lower-value transactions, SWIFT Go promises to be a key tool for businesses of all sizes engaged in international trade and services.
SWIFT Go relies on the same network that SWIFT has in place but introduces a framework meant to facilitate faster and more efficient low-value international payments. It's designed to lower the processing time and increase transparency for smaller, time-sensitive transactions, like cross-border transfers under €100,000. Here's how it works technically:
SWIFT Go is an application based on SWIFT GPI, which is an extension of the global SWIFT network for increased efficiency of cross-border payments. The SWIFT network connects over 11,000 financial institutions globally, providing secure and standardized messaging for transactions. When a payment is initiated via SWIFT Go, it's transferred through the SWIFT network, which uses the FIN protocol for secure transfer of payment instructions between banks.
While traditional SWIFT payments typically involve several intermediary correspondent banks between the paying and the receiving bank, those intermediaries create downstream inefficiencies by introducing additional touchpoints and extra costs.
But SWIFT Go removes many of the intermediaries through a direct transfer path. And what that means is the payment is transmitted directly between the sender's and the recipient's banks through SWIFT.
The payment instructions are sent by the sender's bank in a SWIFT Go format that is specifically designed for low-value, high-frequency transactions.
There are fewer intermediaries since the two banks have already agreed to each other in bilaterals and workflows to support SWIFT Go.
When a payment request is made, the payer's bank creates a SWIFT Go payment message in MT103 message format. This is the set message used for payments in SWIFT, carrying all the information relevant to the transaction.
Elements in the message include:
This message is then sent through the SWIFT network to the recipient's bank, ensuring that all transaction details are securely exchanged.
While traditional SWIFT payments may involve settlement through multiple banks, SWIFT Go leverages pre-established relationships between banks to enable quicker settlement. This typically happens via a correspondent banking model or direct bilateral agreements. The sending bank communicates with the recipient bank through a pre-established corridor of low-value payments (which have been optimized for speed and low cost).
Fewer intermediaries reduce steps to complete the payment, resulting in saving on time and cost associated with the settlement process.
With the SWIFT GPI initiative that SWIFT Go falls under, payment tracking in real-time is enabled. The tracking of SWIFT Go payments is possible through a unique tracking code known as a UETR embedded in every payment message. The entire process involved in making the transfer would be transparent in terms of how payments have been made.
In SWIFT Go, messages are enriched with tracking information, which allows the parties to know when a payment has been successfully processed, and whether any type of problem occurs (delays or insufficient information).
Although SWIFT Go is best for single currency transfers, it still enables cross-border payments since it can handle conversions of currencies in the same way as SWIFT GPI. For international transactions, foreign exchange takes place through the global FX system that is incorporated into the SWIFT network. The fixed fees for SWIFT Go include both the cost of transfer and any applicable currency conversion fees.
SWIFT Go was developed to meet the changing needs of international businesses, particularly the increasing requirement for cheaper, more transparent, and faster cross-border payment services. More than ever, the evolving nature of global payments, especially through the continued growth of digital payments and recent fintech innovations, made the traditional SWIFT systems, which were developed for large, high-value transactions, less suitable for the needs of small and medium-sized enterprises and individuals. These companies and users needed an efficient cross-border payment solution that wouldn't present high costs and complexities as typically accompanied by traditional banking systems.
Traditionally, cross-border payments with SWIFT had been expensive due to the involvement of multiple intermediaries, hidden fees, and fluctuations in exchange rates. This made it difficult for smaller businesses to afford or accurately predict the cost of sending payments abroad. SWIFT Go, with its fixed fees and pre-agreed exchange rates, solves this issue by offering cost transparency, allowing users to know exactly what they’ll pay for a transaction before sending money. This certainty is crucial for SMEs, which often operate on tighter budgets and need to keep payment costs predictable.
The rise of fintech platforms like Karbon, Wise, and PayPal has disrupted conventional financial payment models as they have so far offered cheaper, faster, and more user-friendly alternatives to traditional banking systems. The competition is mainly on low-value transactions, where the fintech platforms have attracted businesses and even individuals seeking faster and cheaper ways to send money abroad. For SWIFT, this called for a solution that can compete against other such platforms, concerning speed, cost, and accessibility. SWIFT Go was designed specifically to service this market by offering a global network with the convenience and efficiency that competing fintech services provide.
With SWIFT Go, the company has finally addressed the call for greater affordability, and accessibility of cross-border payments. This new product provides a global payment network at a lower cost and with predictable pricing. The SWIFT Go innovation allows businesses and individuals engaged in international trade to tap into the security of the SWIFT network and global reach.
Understanding these use cases helps businesses choose the right solution based on their needs.
While the traditional SWIFT is still a more reliable medium for large to high-value transactions, SWIFT Go has some advantages tailored to the needs of small businesses and freelancers. Here's a summary of the main advantages:
One of the distinctive features of SWIFT Go is its cost transparency. The classic method of payment with SWIFT involves a long chain of intermediaries and hidden charges, which can result in unpredictable costs. This is particularly challenging for small businesses and freelancers, who rely on predictable expenses to maintain cash flow.
With SWIFT Go, users pay fixed fees, making the cost structure clear upfront. Predictive pricing thus ensures that no surprises surface at the international payment level, and businesses can plan budgets with accuracy. The savings realized with the smaller payments actually amount to significant reductions from the fluctuating nature of traditional SWIFT fees.
Another major strength of SWIFT Go is speed. Traditional SWIFT payments take considerable days if intermediaries are involved, and the payment is routed through multiple banks. For businesses that need to make regular international payments, for example, to pay their suppliers, freelancers, or contractors, such delays may disrupt operations and cash flow.
SWIFT Go is built for the smallest amounts, ensuring the desired speed in transferring money - usually within a business day or two. This is a wonderful investment that makes a difference in business operations for small businesses concerned with timely settlements. For freelancers, being able to receive money quickly does make all the difference in keeping personal finances manageable.
SWIFT Go makes the SWIFT network more accessible to a wider range of users. It opens up global payments to individuals and smaller businesses who would not have earlier had access to the SWIFT network. Be it a small Indian business paying a supplier located abroad or an individual freelancer who receives payments from clients all over the world, SWIFT Go allows seamless cost-effective cross-border transactions, equipping these users to compete in today's global market.
Traditional SWIFT transactions are not transparent during the payment process, especially when more than one intermediary has to be involved in the process. As a result, this lack of transparency makes tracking their status difficult for small businesses and individuals.
With SWIFT Go, users get access to clear tracking and real-time updates on their payments. The improved transparency would mean that businesses stay informed about their transactions.
Karbon Business allows Indian businesses to simplify cross-border payments while offering efficient solutions for both SWIFT Go and SWIFT GPI.
While SWIFT Go focuses on low-value, fast international transfers, and SWIFT GPI enhances the speed and transparency of global payments, Karbon complements both services by offering businesses a seamless experience. Businesses can use both SWIFT Go and SWIFT GPI with Karbon.
You can sign up with Karbon and make your first international money transfer within 2 hours. Contact us today to learn more!
SWIFT Go is a powerful solution for small businesses, freelancers, and individuals looking to send or receive cross-border payments quickly, affordably, and securely. With its fixed costs, faster processing times, and global reach, SWIFT Go outshines traditional SWIFT for low-value payments, democratizing access to global financial networks. Whether you're a business looking to streamline supplier payments or an individual receiving international remittances, SWIFT Go offers a cost-effective and reliable alternative to traditional payment methods.
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