A SWIFT code (also known as a Bank Identifier Code or BIC) is a unique identification code used globally to identify a specific bank during international transactions. It ensures that money is sent to the correct bank, especially when processing cross-border payments.
SWIFT stands for Society for Worldwide Interbank Financial Telecommunication, a network that enables financial institutions to securely exchange financial messages and information. For businesses exploring financing options, you can check your business loan eligibility to understand how you can leverage funds for your international operations.
Format of a SWIFT code
A SWIFT code consists of 8 or 11 characters that provide specific details about the bank and its location.
- AAAA – 4-letter bank code
- BB – 2-letter country code
- CC – 2-letter location code
- DDD – 3-letter branch code (optional)
Example: HDFCINBBXXX
Here, “HDFC” is the bank, “IN” is the country, “BB” is the location, and “XXX” represents the head office.
How does a SWIFT code work?
Here is how a SWIFT code facilitates secure global transactions:
- Identifies the exact bank involved in an international transaction.
- Works in combination with the recipient's bank account number.
- Ensures accurate and fast money routing across countries.
- Supports secure, standardised communication between financial institutions.
Importance of SWIFT code in international banking
The SWIFT code plays a pivotal role in cross-border banking:
- Ensures accurate international fund transfers.
- Reduces the risk of funds being sent to the wrong bank.
- Enables secure messaging between banks.
- Essential for sending and receiving international remittances.
- Required for foreign currency wire transfers and receiving money from abroad.
How to find SWIFT code?
You can find the SWIFT code of your bank using the following methods:
- Check your bank account statement or cheque book.
- Log in to your bank’s net banking portal.
- Visit your bank’s official website or contact customer support.
- Use online tools or directories to look up SWIFT codes. Also, to explore quick funding options, you can check your pre-approved business loan offer that may help support your business needs.
SWIFT vs. IBAN vs. routing number
Here is a comparison of SWIFT code, IBAN, and routing number to help understand their differences:
| Feature | SWIFT code | IBAN | Routing number |
|---|---|---|---|
| Used for | International transfers | International transfers (mainly Europe) | Domestic transfers (mainly US) |
| Format | 8 or 11 alphanumeric characters | Up to 34 alphanumeric characters | 9 digits |
| Identifies | Bank and branch | Bank, branch, and individual account | Bank and location |
| Region of use | Global | Europe, Middle East, and some other countries | United States |
When is a SWIFT code required?
A SWIFT code is typically required in the following scenarios:
- Sending money internationally to another country.
- Receiving foreign currency payments.
- Making international wire transfers.
- Processing business transactions with overseas clients or partners.
How SWIFT codes work for international payments
In international payments, SWIFT codes ensure seamless money movement by:
- Guiding the transfer through intermediary banks (if required).
- Ensuring the message reaches the correct financial institution.
- Facilitating communication about the transaction between sender and receiver banks.
Common SWIFT code errors and how to avoid them
Avoiding SWIFT code mistakes can save you from failed or delayed transactions. Here are common errors and how to prevent them:
- Incorrect code entry – Always double-check the code with your bank.
- Using outdated codes – Verify the current SWIFT code on the bank’s official website.
- Confusing SWIFT with IBAN or routing numbers – Understand the purpose of each code.
- Missing branch code – Ensure the full 11-character code is used if a specific branch is required.
Alternatives to SWIFT for international transfers
While SWIFT is widely used, there are other alternatives for international fund transfers:
- Wise (formerly TransferWise) – Offers cost-effective currency conversion and transfers.
- Western Union and MoneyGram – Good for fast cash pickups.
- SEPA (Single Euro Payments Area) – Used for euro transactions within the EU.
- Cryptocurrency Transfers – Peer-to-peer transfers with lower fees.
- PayPal/Xoom – Convenient for small personal remittances.
Conclusion
A SWIFT code is an essential part of international banking that ensures accuracy, security, and efficiency in cross-border financial transactions. Whether you’re an individual sending money abroad or a business managing international operations, understanding how SWIFT codes work can help you avoid costly mistakes. If you’re a business owner navigating global transactions, you may also consider a business loan to strengthen your financial operations and manage international trade more effectively.
