money-transfer-swift

International Money Transfer, Swift Remittance

SWIFT is an acronym that’s often used in banking — but what exactly does it mean and how does it affect you? The SWIFT/BIC (Bank Identifier Code) is an international standard for the identification of banks. Each bank in the SWIFT system internationally has a SWIFT code which is usually used for transferring money internationally.

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What does SWIFT mean?

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. SWIFT is the world’s leading provider of secure financial messaging services. In simple terms, it is a system that banks use to securely send messages to each other. It is one of the key pillars of the financial world, connecting more than 11,000 member banks in some 200 countries and territories globally. Trillions of dollars’-worth of currency are sent across borders every single day – and it’s largely thanks to the messages sent by SWIFT.

How does SWIFT work?

Lets assume, you wish to transfer Rs. 1,00,000/- from your bank in India to your friend in the US, you’ll need a few key details; namely your friend’s account number and his bank’s SWIFT code. If the two banks have an account with each other, they authenticate the payment request, apply an exchange rate and the equivalent amount is deducted from your bank account for your friend to receive.

If the banks don’t have a relationship, the message will be sent through intermediary banks, until the payment request is verified for your friend to receive his or her money.

What is the Difference Between IFSC and SWIFT Code for Funds Transfer?

The terms are used commonly in banking transaction where one needs to remit money through electronic transfer. The main difference between two terms is IFSC is needed while transferring funds within the country and SWIFT code is needed while transferring funds internationally.

SWIFT code stands for ‘Society for Worldwide Inter-bank Financial Telecommunication’ code is a form of Bank Identifier Codes (BIC), it is a unique identification code used by banks. The Swift code consists of 8 or 11 characters. When 8-digits code is given, it refers to the primary office. The code formatted as below;

  • First 4 characters – bank code (only letters)
  • Next 2 characters – ISO 3166-1 alpha-2 country code (only letters)
  • Next 2 characters – location code
  • Last 3 characters – branch code, optional

These codes are mainly used for the transferring of money between banks especially for international wire transfers and also used for exchanging of other messages between banks. However, SWIFT does not assist in fund transfers but you must know the SWIFT code of the bank in a when you want to send money abroad.

IFSC code stands for Indian Financial System Code (IFSC) is a unique identification code used to accurately identify the bank branch engaged in the digital money transfer system such as National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS) within India. and is specific to a bank branch.

The code is a combination of 11 alphanumeric characters whose details are provided below:

  • First 4 characters represent bank code.
  • The 5th character is 0.
  • Last six characters are branch code.

To transfer funds, one needs to know the IFSC code through RTGS or NEFT within the country, so that the beneficiary gets the funds directly in his account. All the bank branches within the country are assigned an IFSC code by the Reserve Bank of India. The code is used by the inter-bank fund transfer systems to proceed the message to the respective bank branch.

Conclusion

The basic difference between these two codes is that SWIFT code is used when the transfer of funds between banks takes place internationally while IFSC code is used when there is a nationwide inter-bank fund transfer.

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