A SWIFT transfer is a safe and reliable payment method.
When you need to send money from one country to another, the SWIFT network links up banks using standardised codes for payments.
SWIFT has been around since the 1970s and remains the dominant way to send money abroad.
It’s basically a messaging system for banks. It consists of a network of 11,000 financial institutions in over 200 countries.
Payments can take anywhere between 1-4 working days.
How does a SWIFT transfer work?
From a customer’s perspective, a SWIFT money transfer is quite simple once you understand what’s needed.
Step 1: Identification check
Before you make a SWIFT transfer, new customers need to be identified due to financial regulations.
You may need to email a scan or photo of your passport and a recent bill.
Step 2: The payment details
You will also need to have the details of where you want to send your money.
This is called the ‘recipient bank account’ or the ‘beneficiary’.
Here’s a simple list of what’s needed:
- Account name
- Bank name
- Bank Swift/BIC code
- Bank account number
The bit you might be unfamiliar with is the SWIFT code.
This is also known as a BIC (Bank Identifier Code).
The SWIFT code identifies a bank, its country, city and branch.
SWIFT codes are 8 to 11 characters long and consist of both letters and numbers.
How do you find the SWIFT code?
You can get the SWIFT code from a bank statement, logging into your account online or asking in a branch.
If in doubt, a money transfer specialist will help you with this.
Step 3: Secure an exchange rate
The exchange rate is often the most important cost of a SWIFT transfer.
Your bank or money transfer specialist will quote you their current exchange rate.
If you are happy to proceed, the exchange rate will be locked-in for you.
Step 4: Send in your money
If you use a bank, they will require your funds before you secure a rate. However, if you use a money transfer specialist, you can secure a rate then send in your money.
After your funds are received, your work is done.
Your bank or money transfer specialist will convert your money into the currency needed and send it on to the recipient bank account (beneficiary).
Why does SWIFT take so long?
Some people wonder why a SWIFT transaction takes so long when domestic money transfers can be made instantly.
The time taken is due to banking procedures such as anti-fraud and anti-money laundering checks, as well as crediting and clearing funds to the recipient.
Some banks will also route your money via an intermediary bank if there is no direct relationship between your bank and the destination bank.
SWIFT is attempting to get quicker as newer rivals are threatening its global dominance.
Banks vs Money Transfer Specialist: Is there a difference?
Just because SWIFT is a standard way of sending your money abroad, it doesn’t mean everything else is standardised.
The cost and service of each bank or money transfer company may vary considerably.
Using your bank might seem like an obvious option for making a SWIFT transfer because they usually have hold of your money already.
But that doesn’t mean you are obliged to use them.
A money transfer company can send your money abroad using the same, SIFT payment method.
In our experience, the banks often charge a lot more than alternative providers.
They get away with it because they know some people won’t shop around and will accept their banks fees and charges without question.
In fact, some customers don’t even know what they were charged even after they’ve sent their money.
We took a look at what a SWIFT money transfer costs at the UK”s largest banks.
The major UK banks are charging around 3-4% of the amount you transfer. To put that into perspective, money transfer specialists can cost up to 60%-70% less.
You will find the banks charge a combination of exchange rates and fees.
The exchange rate will vary based on the amount you send, but the fees will be fixed per SWIFT payment made.
Another thing to note is that the banks can be frustrating to deal with.
The staff at branches are generalists (mortgages, savings, investments, insurance etc) and will not know a lot about international transfers.
You might find yourself having to tell the staff member what to do!
As money transfer companies specialise in sending money abroad, the customer experience should be smoother and hassle-free.
How to avoid paying hidden fees
People hate paying fees - me included.
For SWIFT transfers, the big banks tend to charge an assortment of fees.
There’s transfer fees, correspondent bank fees, priority payment fees, and if you want to amend or trace your payment, there’s fees for that too.
The exact fees depend on the bank, but it’s inherently difficult to figure out what you will be charged.
Often the details are buried in a ‘Tariff Schedule’ that runs for 15-20 pages.
Most people only find out the fees after they’ve made their payment.
I’m not suggesting you are in a position to negotiate with your bank.
The only real way to avoid their fees is to bypass your bank altogether.
Some money transfer companies will charge you no fees for SWIFT transactions (we fall into that camp).
The only cost of the SWIFT transfer is included in the exchange rate quoted.
It makes cost comparisons easy, and you know how much money will be received at the other end – so the recipient doesn’t get short-changed either.
5 reasons to avoid your bank
- Their exchange rates can be uncompetitive
- Banks charge transfer fees
- Foreign exchange is not their area of expertise
- They won't help you with timing
- You are not their priority
Getting a better exchange rate on your SWIFT transfer
When I look online, there is a lot of talk about SWIFT transfer fees.
But a lot of customers forget about the exchange rate.
For larger SWIFT transfers, the exchange rate tends to be the more significant cost.
It’s best illustrated using an example.
On a SWIFT money transfer of say £50,000, say your bank added a 3% margin onto the exchange rate and you also paid £50 in various fees.
That means the exchange rate cost is £1,500 compared to £50 in fees.
One is 30 times bigger than the other!
Yet most of the discussion online seems to be about fees.
The fact is even small differences in the exchange rate can make a significant difference.
You may have seen that exchange rates continuously move.
Swings of 2%-3% can happen every week.
It means that timing is also important.
Most people have a window of time in which they can transfer their money.
However long or short your timeframe, there will be good times and bad times to exchange your money.
It’s why you may find it useful to speak to a money transfer specialist – some will offer that as part of their service.
A money transfer specialist can monitor the daily movements in exchange rates and let you know when the rate moves in your favour.
The point is that a better exchange rate will ultimately put more money in your pocket.
Are money transfer companies all the same?
In a word: no.
The main difference is that a lot of money transfer companies these days are really just online platforms or ‘apps’.
The better-known names are PayPal, Transferwise, CurrrencyFair and Revolut.
They have their place in the market, but only suit some customers.
If you choose an online platform or app, please be sure you do everything correctly.
It's not normally possible to speak to anyone. Customer support is via webchat or email.
I know from my own experience, I wouldn’t be comfortable sending a large amount of my money using an app I’ve downloaded on my phone.
It depends on your situation, I guess.
There are companies, such as Key Currency, that offer a genuine service alongside foreign exchange and the SWIFT payment process.
This is more suited to those that want the reassurance of some human contact and perhaps some guidance on exchange rates.
If there is ever a problem or question you have, you can call and speak directly to a human being who can help.
For large currency transfers, many customers want the peace of mind of having someone they can speak to.
As I say, there is plenty of choice, and it comes down to the individual as to what they prefer.
One additional check is to make sure you are dealing with a company that is Authorised by the Financial Conduct Authority (FCA).
The reason is Authorised firms must transfer client funds using a safeguarded bank account.
To find out if a company is Authorised just type their name into the Financial Services Register.
Quick Summary: SWIFT Money Transfers
SWIFT is a safe and secure payment system that has stood the test of time.
- To make a SWIFT transfer, you can use a bank or money transfer specialist.
- SWIFT payment can take anywhere between 1-4 working days.
- Banks typically cost more. Don’t be afraid to get an alternative quote.
Who are we?
Key Currency is a leading money transfer specialist.
What sets up apart from other companies is we provide a service.
All customers are assisted with their payment to avoid any mistakes.
We can also discuss your requirements and agree on the right time to exchange your money, rather than using a bank or online-only system, and having to accept whatever rate they give you on the day.
Our rates are highly competitive, and we charge you no fees.
In terms of regulation, we are an Authorised Payment Institution (Financial Services Register register No. 753989). All payments are conducted through safeguarded client accounts held at top tier banks.
Our company has attained a 5-star customer rating on Trustpilot, based on over 600 reviews.
If you would like to compare us to your bank or existing provider, simply request a free quote below.