SWIFT bank account transfer

Electronic Funds Transfer (EFT) is the process of electronically moving funds from one bank account directly to another without intermediate action by bank employees. Since the transfer is done completely electronically online, no paper money is moved. EFT is also referred to as an ePayment system because the transaction is done completely electronically.


The most important element of EFT is that the payer’s and payee’s bank accounts are specifically identified. Outside of the USA, the terminology generally used refers to a SWIFT/IBAN code, and in the USA, the term most used is either the BIC or SWIFT code. Basically, they all act as unique identifiers for a specific account in a designated bank branch in a specific country.


The general process can be described as pull/push. A person or company wishing to pay into another account will instruct his bank to transfer money from his account into a designated target account, supplying its SWIFT and IBAN codes. The sending bank will then pull the amount of the transaction from the payer’s account, and send an electronic message to the receiving bank to push the funds onto the payee’s account. The actual process is all handled automatically by the two banks’ computer systems and there is no manual intervention necessary.


How to open SWIFT account

Unique SWIFT codes belong to each commercial bank that is part of the SWIFT network. Further unique codes are allocated to the individual branch operating your account. This way, every bank branch in the global network has its own unique SWIFT code, and your account will be associated with this SWIFT code in all inter-bank transactions. Your bank will also have assigned a unique account code inside its own identification structure. So opening a SWIFT account is the same process as opening any bank account, as long as your bank is a member of the SWIFT consortium.


Meaning of SWIFT Transfers

Society for Worldwide Interbank Financial Telecommunications (SWIFT) messaging protocol is used by a members of a cooperative of banks and other financial institutions to securely send and receive money transfer instructions between its members.  There are currently 13,000 member institutions.


This network allows individuals and businesses to electronically transfer money directly from their own account into a recipient’s account.


SWIFT money transfer system

SWIFT works by assigning each member an ID code that uniquely identifies the institution. Further codes for the country and location of the institution’s branch plus a branch number are added, giving an 11 character SWIFT code that uniquely identifies it. A sending institution needs to know only the receiving institution’s SWIFT code, and the recipient’s own bank account number, to complete the transaction. The messaging takes place via the shared SWIFT network, which guarantees end-to-end security


SWIFT for Electronic Funds Transfers

SWIFT does NOT do any of the funds transfers itself. It is just a bank-to-bank messaging system that institutions use to communicate payment instructions between each other. A sending bank that is instructed by its customer to send funds knows at its end of the amount involved and the sender’s bank account that is to be debited. The sender provides details of the recipient’s own bank account (number plus the SWIFT ID), and a message is sent from the sending bank through the proprietary SWIFT network to the receiving bank.


Because SWIFT doesn’t actually send money, institutions that use the network also need to wire the funds once the SWIFT message has been accepted.


Bank SWIFT transfer charges

There are no hard-and-fast rules for how a bank charges for EFT transactions through SWIFT. Basically, SWIFT itself is an interbank message system and has no charge to a bank end-customer. However, the resulting wire transfer from sending bank to receiving bank can have different components, depending largely on whether the two banks are branches of the same institution, or are in the same state/country and whether they have an established mechanism for wire transfers or have to pass the transfer through third-party institutions that may levy some charge. Generally, the sending bank will charge its customer a fee based on a flat amount plus some percentage of the total involved, and the receiving bank will deduct any charges that were levied en-route, plus its own fee, before crediting the recipient’s account.


Banks should be able to calculate a total for its own fees at the time of sending the SWIFT instructions, but the final fee deducted at the receiver’s end cannot be calculated until the wire transfer has completed.


How to transfer money to a SWIFT account

The same process applies for movement of money between different bank accounts in the same bank as across into a different bank (or even in a different country). It starts with your instruction to pay a certain amount into another account, for which you must supply the SWIFT code and account number. This process can be via an online portal, an ATM, a mobile app or on the phone to the bank. Your bank will then deduct the amount of the transaction from your own account, and send an electronic message to the receiving bank to credit the funds onto the receiving account corresponding to the SWIFT code/account number you supplied. The actual process is all handled automatically by the two banks’ computer systems and there is no manual intervention necessary.

Recommended for you

Interest rate levels in percentages per annum
Since the financial crisis of 2008, banking interest rates for customer accounts have followed the steep decline in central banks’ prime lending rates. This is due to the policies followed by the major economies to flood the markets with cash in order to stimulate spending...
Accelerated digital banking demand in Europe is an opportunity
Recent studies have shown that the COVID-19 pandemic has driven awareness of digitally-enabled financial services providers to unprecedented and unexpected levels in Central and Eastern Europe. Effects of the pandemic As the pandemic spreads and countries are experiencing another wave, Europeans are interacting more widely...
Interview with: Darius Kulikauskas, Ph.D., CEO of  Pervesk and advisor at Bankera
Interview with: Darius Kulikauskas, Ph.D., CEO of  Pervesk and advisor at Bankera Darius Kulikauskas is the CEO of Pervesk UAB and an adviser at Bankera. He holds a Ph.D. in Economics from Vilnius University where he also obtained his Master of Laws. Prior to joining Bankera,...