SWIFT Payment refers to the Society for Worldwide Interbank Financial Telecommunication, an organization based in Brussels that has been around since the early 1970s. It is the world’s largest electronic payment messaging system, facilitating the exchange of more than $6 trillion a day, according to 2012 estimates.
SWIFT is a vast messaging network used by banks and other financial institutions to quickly, accurately, and securely send and receive information, such as money transfer instructions.
Financial institutions use this system to securely transmit information and instructions through a standardized system of codes.
WORKING OF SWIFT PAYMENT SYSTEM ?
When two banks have a relationship (commercial accounts with each other), the transfer is done as soon as the SWIFT message has been received. SWIFT messages are programmed in a language known as FIN. The money from one’s personal account is transferred to the other person’s account via banks’ commercial accounts. The banks take a fee.
If the two banks do not have a relationship, the intermediary bank will facilitate the process for which additional fee is charged.
USERS OF SWIFT NETWORK
Apart from banks, the SWIFT system network is also used by the following businesses –
- money brokers and security broker dealers
- clearing systems
- Asset Management Companies
- Corporates, Non-bank financial institutions and more.
In order to use the service, institutions are required to declare compliance of 16 basic security principles laid out by SWIFT for securing their access points with the network. These include credentials management and setting up of firewalls.
Thus, in a nutshell, SWIFT is a network system which is used to communicate money transfers between two banks and also offers many other services that assist businesses and individuals to complete seamless and accurate business transactions.