How SWIFT Codes Work in International Banking

In the modern globalized economy, international banking is the linchpin of cross-border trade and investment. At the core of this process is a key element: the SWIFT code. For businesses such as EximPe, which facilitate export-import payments and enable businesses to grow globally, knowing how SWIFT codes-and their close relative, the SWIFT BIC function, work is vital to ensure smooth, secure, and efficient transactions.

What is a SWIFT Code?

A SWIFT code sometimes called a SWIFT BIC code or just SWIFT BIC, is a special number that banks around the world have. “SWIFT” means the Society for Worldwide Interbank Financial Telecommunication. This is the group that manages the global network for these codes. You can think of a SWIFT code as a postal code for banks worldwide. It helps make sure your money goes to the right bank no matter where it is in the world.

A SWIFT code is typically 8 or 11 characters long:

• The first 4 characters identify the bank.
• The next 2 characters represent the country.
• The following 2 indicate the location or city.
• The optional last 3 characters specify the branch.

For example, the SWIFT code “UNCRITMM” breaks down as follows:

• UNCR: UniCredit Banca
• IT: Italy
• MM: Milan

Why Are SWIFT Codes So Important in International Banking?

The process of international payments poses complexities due to the necessity of different banking institutions, currency types, and regulatory frameworks working in tandem. The SWIFT code or SWIFT BIC code serves multiple critical functions because

• Ensures Accuracy: Each bank gets a unique ID with SWIFT codes, which helps avoid mistakes and ensures money goes to the correct bank.
• Enhances Speed: These codes let computers handle payments faster, so money reaches its destination sooner. Boosts Security: SWIFT uses a standard messaging system with security measures. SWIFT code provides financial security through secure transactions and reduces criminal activities such as money laundering.
• Supports Compliance: SWIFT code procedures contribute to bank compliance through international standards to stop money laundering and satisfy all regulatory requirements.

For businesses using EximPe’s platform, these advantages result in quicker, safer, and more reliable international payments. This lets businesses focus on growing instead of dealing with paperwork and risks. They can save time and worry less about money transfers.

How Does a SWIFT Code Work in Practice?

Let’s walk through a typical international transaction:

1. Starting Process: An Indian company needs to pay their German supplier. To do this, they use a service called EximPe. They enter the necessary bank details of the German supplier, including the SWIFT BIC code, into EximPe. 
2. Sending Message: Through EximPe, a partner bank sends a secure message using the SWIFT network. This message travels with the German bank’s SWIFT code to make sure it goes to the right place. 
3. Check and Confirm: When the German bank gets the message, they carefully check it. They ensure that the SWIFT code and all other information match correctly. 
4. Payment Completion: After confirming everything is accurate, the payment is successfully deposited into the supplier’s bank account in Germany.

Throughout this process, the SWIFT code acts as the digital address, ensuring the payment is routed correctly and securely.

Who Uses SWIFT Codes?

• Banks and financial institutions: For sending and receiving international payments and for interbank communication.
• Businesses: To make and receive payments from overseas partners, suppliers, and customers.
• Payment platforms like EximPe: To streamline and automate the process, reducing manual errors and delays.

SWIFT Codes and EximPe: Powering Seamless Global Trade

Secure and easy international payments are handled at EximPe through the SWIFT network. We have built our payment system to automatically monitor foreign exchange rates and perform compliance checks while tracking payments in real-time through the SWIFT BIC system.

We also have our SWIFT code looker tool to find the SWIFT codes of banks across various countries

We simplify international banking, allowing your company to explore foreign markets confidently. With EximPe, you can trust that every transaction is processed accurately and securely using internationally recognized SWIFT codes.

Conclusion

A SWIFT BIC code serves as the SWIFT code for global banking applications. SWIFT BIC allows people and businesses worldwide to send and receive transactions with security and precision. EximPe relies on the SWIFT BIC system to deliver highly secure, fast payments across international borders. As international trade continues to grow, understanding and using SWIFT codes will become essential for any business looking to expand globally. Every business that wants to reach worldwide success needs SWIFT codes to handle its cross-border financial payment operations.

FAQs

Are SWIFT codes and BIC codes the same?

Yes, they are. SWIFT codes and SWIFT BIC codes have the same identity as Bank Identification codes BIC. Bank Identifier Codes are issued by SWIFT, which stands for Society for Worldwide Interbank Financial Telecommunication. 

Do I always need a SWIFT code for international payments?

Yes, you generally need a SWIFT/BIC code for international transfers, especially outside the SEPA region, to avoid delays or failed transactions. The answer is generally positive, but it especially applies when dealing with money transfers outside of the borders of the SEPA region.

International wire transfers need a SWIFT/BIC code to ensure successful completion. Without using the correct SWIFT code, your payment could face delays and destination wrong farming, which could potentially end up coming back to you.

How can I find the correct SWIFT code?

Verifying your SWIFT code either through your bank or official sources must be done before starting the transfer. When you choose the wrong payment code, your transaction will fail, and money will potentially get lost.