What is a Swift Code and why do we require cross-border transaction?

SWIFT codes are used for processing over 40 million transactions daily.

If you are a Non-Resident Indian (NRI) and have transferred money to an Indian bank account, you might know SWIFT or BIC codes. SWIFT is a massive, global messaging network used by banks and other financial institutions worldwide to quickly and securely transmit financial information such as fund transfers.

What does SWIFT mean, and what is a SWIFT code?

SWIFT, or Society for Worldwide Interbank Financial Telecommunications, is a financial messaging service based in Belgium. It facilitates rapid and highly secure payments between two countries via a SWIFT code, enabling seamless international trade. Under Belgian law, SWIFT is owned and controlled by its shareholders, representing nearly 3500 financial institutions worldwide.

How many countries use SWIFT codes?

SWIFT's importance in the global payment ecosystem is increasing every day. The system exchanges 40 million transactions daily via its platform and facilitates trillions of cross-border payments across the globe. In November 2021, the SWIFT payments system also crossed the milestone of 50 million messages sent by SWIFT member institutions worldwide daily in November 2021.

About 11,000 member banks in 200 countries and territories have used the SWIFT system since it was launched in 1973.

How does a SWIFT code look?

Let's understand this with an example:

IDFBINBBMUM is IDFC FIRST Bank's only SWIFT code for receiving inward remittances from abroad. A SWIFT code contains four significant pieces of information:

• Bank code

• Country code

• Location code

• Branch code

The first four letters represent the bank, followed by two letters that indicate the country code. The subsequent two letters represent the location code, while the final two letters are the branch code. A bank's SWIFT code can hence be 8-11 characters long.

Is the SWIFT code the same as an IFSC code?

The SWIFT code isn't the same as the IFSC code. A bank account's Indian Financial System Code (IFSC) is used to make transactions via Real-Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT) or Immediate Payment Service (IMPS). The IFSC code only comes in handy for bank transactions within the country's geographical limits.

A SWIFT code, on the other hand, by its design, facilitates seamless international financial transactions. Another key difference is the length of the two codes. While a SWIFT code is 8-11 characters long, an IFSC code must be 11 characters long.

Can an NRI use a SWIFT code to transfer money to India safely?

If you are a Non-Resident Indian (NRI) looking to securely transfer funds to an IDFC FIRST Bank NRI account in India via a SWIFT code, our fund transfer services can help you do so instantly, in just a few steps.

How does SWIFT ensure the security of payments?

SWIFT requires its member financial institutions to comply with 16 basic security principles and set up firewalls to prevent financial fraud and complacence with security. The Swift Customer Security Controls Framework (CSCF) consists of 16 mandatory and 11 advisory controls designed to avoid the compromise of credentials and detect anomalous activity.

Backed by financial institutions worldwide, the SWIFT payments system is a trusted medium for securely making cross-border financial transactions.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.