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Generally, international payments need to go through SWIFT payments for outward remittances from a country.
But how do SWIFT money transfers work? What are the charges involved?
Read on…
A SWIFT money transfer, also known as a SWIFT payment, is an international money transfer facilitated through the SWIFT network, which stands for the Society for Worldwide Interbank Financial Telecommunication, provides a secure and standardized messaging system that
A SWIFT money transfer, also recognized as a SWIFT payment, is a process that includes the global transfer of funds through the SWIFT network.
SWIFT money transfer codes, often known as SWIFT codes or Bank Identifier Codes (BIC), are distinctive alphanumeric identifiers allocated to financial institutions taking part in the SWIFT network. These codes play a crucial role in international wire transfers by uniquely identifying specific banks or financial entities involved in the transfer process.
Typically consisting of 8 to 11 characters, a standard SWIFT code is structured as follows:
The first four characters, composed of letters only, represent the institution code, identifying the bank or financial institution.
The next two characters, also letters only, signify the country code, indicating the location of the institution.
The subsequent two characters, which may include letters and numbers, represent the location code, providing additional information about the bank's specific branch or office.
In some instances, the last three characters (letters and numbers) may represent an optional branch code.
The following outlines general estimates for SWIFT money transfers, specifically focusing on outward remittances from India.
Percentage of transferred amount: 0.1% to 1%
Flat rate: ₹1,500 to ₹3,500
Intermediary processing fee: ₹700 to ₹2,000
Transaction processing fee: ₹1,000 to ₹2,500
Inward remittance fee: ₹500 to ₹2,000
Account credit fee: ₹300 to ₹1,500
Currency conversion fee: 1% to 3%
Exchange rate margin: 1% to 2%
Express transfer fee: ₹1,500 to ₹3,500
Urgent processing fee: ₹1,000 to ₹2,500
Tracking service fee: ₹300 to ₹1,000
Transaction confirmation fee: ₹300 to ₹1,500
Fund recall request fee: ₹500 to ₹2,000
SWIFT money transfers don't happen immediately; the process typically takes around one to four business days for the funds to reach the destination bank account. The timeframe varies depending on factors such as the destination country, differences in time zones, and variations in banking processes. Moreover, including multiple checks for fraud and money laundering contributes to the overall duration needed for the transfer.
In cases where your bank lacks a direct relationship with the destination bank, the funds must pass through an intermediary bank before reaching your recipient. This additional step further extends the overall transfer time.
To initiate a SWIFT money transfer, follow these steps:
Contact Your Bank:
Get in touch with your bank and inquire about their SWIFT money transfer services. Ensure that your account is eligible for international transactions.
Provide Necessary Information:
Furnish the recipient's details, including their full name, bank account number, SWIFT/BIC code of their bank, and the destination country.
Confirm Fees and Exchange Rates:
Ask your bank about the fees associated with the transfer and inquire about any currency conversion rates. Make sure you are informed about all the related costs.
Complete the Transfer Request Form:
Fill out the required forms provided by your bank, specifying the amount to be transferred, the recipient's details, and any other requested information.
Review and Confirm:
Carefully review the provided information before confirming the transaction. Ensure accuracy in the recipient's details to avoid complications.
Receive Transaction Confirmation:
Once the transfer is initiated, you should receive a confirmation from your bank. This may include a transaction reference number for tracking purposes.
Monitor the Transfer:
Keep track of the transfer progress. Some banks provide tracking services or updates on the status of your SWIFT money transfer.
Notify the Recipient:
Inform the recipient about the impending transfer, providing them with relevant details such as the expected arrival date and any tracking information available. Following the transfer's conclusion, the recipient's bank will deposit the funds into their account, and the recipient might receive a confirmation notification.
Verify Completion:
Confirm with the recipient that the funds have been successfully received. If any issues arise, contact your bank promptly for assistance.
SWIFT money transfers are pivotal for businesses involved in global financial transactions. Below is a guide on how businesses can effectively utilize SWIFT to facilitate seamless cross-border fund transfers:
Establish a Business Account with SWIFT Capability:
Ensure that your business maintains an account with a financial institution supporting SWIFT transactions. Discuss the available SWIFT services tailored for business clients with your bank.
Collect Recipient Details:
Gather comprehensive information about the recipient's bank, including the SWIFT/BIC code, account number, and other essential details. Accuracy in information is critical for the success of transactions.
Understand Transfer Costs:
Inquire about the fees associated with SWIFT transfers for businesses. Stay informed about any percentage charges, flat fees, or additional costs related to intermediary banks and currency conversions.
Explore Bulk Payment Options:
For businesses frequently involved in international transactions, explore bulk payment options facilitated through SWIFT. This approach can streamline the process and potentially offer cost-saving benefits.
Utilize Electronic Banking Platforms:
Many banks offer electronic banking platforms that enable businesses to initiate and track SWIFT transfers online. Explore the features provided by your bank to enhance the convenience of the process.
Ensure Regulatory Compliance:
Familiarize yourself with international regulations governing cross-border transactions and ensure compliance. Verify that your business documents and transactions adhere to regulatory requirements to avoid delays or complications.
Implement Secure Communication:
Emphasize the importance of secure communication when transmitting sensitive financial information through SWIFT. Collaborate with your bank to establish secure channels for the transmission of transfer instructions. Monitor exchange rates closely for businesses with multiple currencies, as fluctuations affect transfer costs.
Establish Communication with Recipients:
Maintain open communication with your international business partners. Notify them about upcoming SWIFT transfers, providing relevant details to ensure a smooth reception of funds.
Review and Reconcile Transactions:
Regularly review transaction statements and reconcile them with your business records. This practice helps identify any discrepancies or issues that may require prompt resolution.
Is SWIFT money transfer processing still dominant?
In the domain of international money transfers, SWIFT (Society for Worldwide Interbank Financial Telecommunication) continues to play a substantial role. Nevertheless, the financial technology (fintech) sector is evolving swiftly, bringing forth alternative approaches for cross-border transactions.
Fintech companies and digital payment services offer credible alternatives with quicker processing times, reduced fees, and user-friendly interfaces. Moreover, the acceptance of blockchain and cryptocurrencies is on the rise as choices for international money transfers, even though they are not yet universally embraced.
To transfer money with a SWIFT code:
To initiate a SWIFT payment from India:
Open SWIFT-Supported Account:
Ensure you have an account with a bank in India that facilitates SWIFT transactions.
Collect Beneficiary Info:
Gather recipient details, including full name, account number, bank name, branch address, and SWIFT/BIC code.
Visit Your Bank:
Visit your bank branch or utilize online platforms, notifying them about your international payment through SWIFT.
Confirm Fees and Rates:
Inquire about fees and currency conversion charges. Check current exchange rates for different currencies.
Review and Confirm:
Thoroughly examine the provided information before verifying the transaction.
The expense of a SWIFT transfer depends on factors such as the initiating bank, transfer amount, destination country, and selected services. Key contributors to the cost encompass the sender's bank fees (percentage or flat rate), intermediary bank fees (if applicable), recipient's bank fees for processing, currency conversion fees, and express transfer fees for expedited processing. Additional services like tracking, confirmation, or fund recall may entail extra charges. Fees vary among financial institutions, influencing the overall cost of SWIFT transactions.
The time it takes for a SWIFT transfer to complete is influenced by factors like intermediary banks, the infrastructure of the destination country, initiation time, currency conversion, verification processes, and the processing time of the recipient's bank.
The involvement of intermediary banks can introduce additional steps, while efficient banking systems in the destination country facilitate quicker transfers. Initiating transfers during weekends or holidays may result in delays, and currency conversion adds extra processing time. Verification and compliance checks, particularly for larger transactions, contribute to processing delays. Express transfers, for a fee, offer expedited processing, and the processing time of the recipient's bank also affects the overall duration of the SWIFT transfer.
