What are SWIFT and BIC Codes? How Do They Work?

SWIFT and BIC codes might sound like cryptic financial jargon, but they play a vital role in international banking. These codes are used when transferring money via an international bank transfer – to pay a global supplier or to receive funds from an overseas business, for example.

A SWIFT code is a series of letters and numbers that identifies a specific bank when making international money transfers via the SWIFT network. “SWIFT code”, “SWIFT ID” or “BIC (Banking Identifier Code)” refer to the same thing and are often used as interchangeable terms.

In this article, we’ll break down exactly what SWIFT is and clarify the differences between SWIFT/BIC codes and IBANs (International Bank Account Numbers).

For businesses and personal users looking for more efficient ways to transfer money, knowing about SWIFT and BIC codes is just the first step. We’ll also lay out some SWIFT alternatives that provide a faster and cheaper way to send and receive money globally.

What is a SWIFT/BIC code?

SWIFT stands for “Society for Worldwide Interbank Financial Telecommunication”. It’s a decades-old financial network set up to make it easier to transfer money around the globe between member banks. SWIFT isn't owned by any one entity, but is run as a cooperative by the banks ‌and financial institutions that make up its membership.

A SWIFT code consists of 8 or 11 characters that identify your country, city, bank, and branch. SWIFT codes work by providing a standardised way to identify banks and financial institutions globally, ensuring that international money transfers are directed to the correct locations.

When you initiate an international transfer, your bank uses the SWIFT network to send a secure message containing the transaction details. This message includes the SWIFT code of the recipient's bank, which tells the network exactly where to send the money.

Are SWIFT/BIC codes the same thing?

There's no difference between SWIFT codes and BIC codes – the terms are interchangeable.

And while SWIFT is the major international financial clearing system for cross-border payments, it’s not the only one. Some others you might come across include:

• CHIPS (Clearing House Inter-Bank Payment System): Mainly used in the USA and Canada.

• NCC (National Clearing Code)

• BSC (Bank Sort Code)

• SEPA (Single Euro Payments Area): For payments across European countries.

• IFSC (Indian Financial System Code).

• CIPS (Cross-border Interbank Payment System): For cross-border payments involving the Chinese yuan (Renminbi).

Each of these systems offers businesses engaging in international transactions a variety of features, advantages, and regional focuses.

What is an IBAN and how is it different from a SWIFT/BIC code?

SWIFT numbers and IBANs (“International Bank Account Numbers”) have different roles to play when a transfer is being made from one country to another – the SWIFT code is used to identify a specific bank whereas the IBAN is used to identify the individual account involved.

In the case of IBANs, the number starts with a two-digit country code. It’s followed by two numbers and other alphanumeric characters. An IBAN isn’t a substitute for a bank's internal account numbering system. It’s a way of providing additional information that helps in identifying overseas payments.

IBANs are also different to “sort codes”, which are domestic bank codes used to route money among financial institutions. Your IBAN is used only for international transactions.

How do SWIFT/BIC codes work?

The SWIFT code itself is made up of four parts: a four-letter bank code, a two-letter country code, a two-letter location code, and an optional three-letter branch code:

• A-Z bank code: 4 letters representing the bank that are usually an abbreviated version of the bank's name.

• A-Z country code: 2 letters representing the country.

• 0-9/A-Z location code: 2 characters made up of numbers or letters that indicate where the bank’s head office is located.

• 0-9/A-Z branch code: 3 digits specifying a particular branch of the bank.

For example, in the SWIFT code "ANZBAU3M", "ANZB" identifies the bank (ANZ Bank), "AU" signifies the country (Australia), and "3M" specifies the location (Melbourne). If a bank decides to use a code with 11 characters, a further three optional characters can reflect individual branches.

This detailed nature of the identification minimises the risk of errors, ensuring a transferer’s funds get to the correct recipient promptly and securely.

Throughout the transaction process, various financial messages are exchanged between the involved banks, confirming the receipt, processing, and completion of the transfer. The process is designed to aid communication between banks and provide the means to handle large volumes of international transactions.

When do you need a SWIFT/BIC code?

As a business user, you'll need a SWIFT number specifically for international transactions. SWIFT codes are essential whenever you send or receive money across borders, ensuring that your funds reach the correct bank and branch.

Typically, you'll be asked for a SWIFT code when:

• Initiating an international electronic transfer: Your bank or payment service provider will request the recipient's SWIFT code to process the transfer.

• Receiving payments from overseas clients: Your international clients will need your SWIFT code to send payments to your account.

• Setting up foreign bank accounts or payment systems: When arranging payment solutions with foreign banks or financial institutions, they often require your SWIFT code to establish connections.

You'll know you need a SWIFT code when you're dealing with cross-border transactions or setting up payment processes that involve international elements. Always have your SWIFT code handy to ensure smooth and accurate global transactions.

Do all banks have a SWIFT/BIC code for international transactions?

Not every bank in the world has SWIFT codes. While the SWIFT network is extensive, covering more than 11,000 banks in over 200 countries, some smaller or regional banks may not have their own SWIFT codes.

Instead, they often use intermediary banks with SWIFT codes to facilitate international transactions. If your bank does not have a SWIFT code, you can still send and receive money internationally by using the services of these partner or intermediary banks.

How do you find a SWIFT/BIC code?

Having your SWIFT or BIC number readily available is essential for making quick and accurate international transactions. You can find your SWIFT or BIC code in several places.

These include:

• Bank statements: Your SWIFT or BIC code is sometimes included on your bank statements, which you can access in your bank’s online portal.

• Bank's website or mobile app: Many banks provide information about your SWIFT or BIC code on their mobile apps or websites. Log in and head to your account details section to find it.

• Customer service: If you can’t find your SWIFT/BIC code online or in your statements, you can call the bank’s customer service centre or visit your bank branch and ask a representative to give you the information.

• Internet search: It’s best to go directly to the source (i.e. the bank in question) but some financial websites and directories feature SWIFT and BIC codes “finders” or “checkers” for a range of banks worldwide. Make sure you use a reliable site to avoid inaccuracies.

What are the alternatives to SWIFT/ BIC codes?

In an increasingly connected world, businesses are making more international transactions than ever. However, the SWIFT system (on which many of these rely) is now over 50 years old, and experience shows it’s not always the ideal solution. The network operates through banks passing messages between one another and the process can take days, with each bank potentially charging a handling fee.

SWIFT's lack of transparency means there’s no way for businesses to know how long their payments will take to clear or how much the transfer will cost. It can be hugely inconvenient when speed is of the essence in paying your suppliers and employees.

Fortunately, there are easier and more affordable ways to transfer funds overseas.

Airwallex offers a fast and affordable alternative to SWIFT

With Airwallex, businesses can make fast (usually same-day) money transfers across the globe. It’s an easy and cost-effective way to pay global suppliers and staff and accept global payments.

You can transfer 60+ currencies around the world fast with no transaction fees, cut out needless FX conversions when accepting and sending payments internationally, and spend in multiple currencies without fees with our Borderless Cards.

Airwallex makes doing international business easier by offering:

• Faster transfers: Traditional SWIFT transfers can take several days due to intermediary banks and complex routing networks. Airwallex leverages its modern infrastructure to enable faster cross-border transfers, often in real time or within a few hours.

• Lower costs: SWIFT transfers can be expensive due to high bank fees and additional charges from intermediary banks. Airwallex offers more cost-effective transfer solutions with transparent fees, helping businesses save on transaction costs.

• Simplified processes: Regular banks require extensive details, including SWIFT codes, IBANs, and intermediary bank information for international transfers. Airwallex simplifies the process, reducing the administrative burden and potential for errors.

• Multi-currency support: Airwallex allows businesses to hold and manage multiple currencies in a single account. This flexibility reduces the need for numerous bank accounts in different countries and minimises currency conversion fees.

• Better visibility and control: With Airwallex, businesses can track their international transactions in real time and gain better insight into their financial activities. This level of transparency helps improve cash flow management and decision-making.

• Greater accessibility: Traditional banks may not always be accessible or offer efficient services for smaller businesses or startups. Airwallex provides an inclusive platform that caters to businesses of all sizes, offering competitive rates and a seamless user experience.

Airwallex powers thousands of fast-growing global businesses worldwide. If you'd like to join them, sign up in a few clicks and you’ll have access to quick, affordable international transfers – and a host of other features that will help your business grow beyond borders.

FAQs

1. Where can I find my SWIFT / BIC code?

You can usually find your bank's SWIFT code on your bank’s website, or on your statements or banking app. Asking at your local bank branch can help if you’re having trouble locating it. Many financial websites and directories offer SWIFT and BIC code "finders" or "checkers" for banks around the world. To avoid inaccuracies, use a trustworthy site.

2. What is an IBAN as opposed to a SWIFT / BIC code?

IBAN stands for “International Bank Account Number”. Each bank account has a unique IBAN that’s used for international transactions. It’s different to a bank’s internal account numbering system. People sometimes get IBAN and SWIFT codes confused, but the difference between the two is simple. IBANs are used to identify individual bank accounts whereas SWIFT codes are used to identify a bank.

3. What is a SWIFT banking system?

SWIFT, short for “Society for Worldwide Interbank Financial Telecommunication”, operates as a global network enabling financial institutions to send and receive information to each other. The aim is to allow international transfers of money to be made more securely. It was set up in 1973, is headquartered in Belgium and is operated by all of its member banks across the globe.