What Are SWIFT Payments? Complete Guide to International Transfers

Understanding SWIFT payments is essential for any business involved in international transfers. SWIFT connects over 11,000 financial institutions across more than 200 countries, processing millions of payment messages every day. Yet despite its central role in global commerce, most people who use the SWIFT network have little visibility into how it actually works — what it costs, how long it takes, and when a faster or cheaper alternative might be the better choice.

This guide covers everything you need to know about SWIFT payments: what the SWIFT system is, how SWIFT payment processing works step by step, what it costs, how to make a SWIFT payment, and how SWIFT compares to alternatives like ACH and SEPA – including how providers like ConnectPay give businesses access to all of these cross-border payment rails through a single platform.

What is a SWIFT payment?

A SWIFT payment is an international money transfer processed through the SWIFT network – the Society for Worldwide Interbank Financial Telecommunication. SWIFT itself does not hold or transfer funds. Instead, it provides a secure messaging infrastructure through which banks exchange standardised payment instructions.

When a SWIFT payment is initiated, the sender’s bank generates a SWIFT message containing transaction details and sends it through the secure SWIFT network to the recipient’s bank, which then credits the recipient’s account. The SWIFT network acts as an electronic messenger between financial institutions – ensuring that instructions are accurate, authenticated, and delivered through a globally standardised format.

SWIFT was founded in Brussels on 3 May 1973 by 239 banks from 15 countries, replacing the outdated Telex wire transfer system. The SWIFTnet messaging system came online in 1977 and has since become the dominant global infrastructure for international payment instructions. By 1979 SWIFT had opened its first US operating centre, and the network has expanded steadily ever since.

How the SWIFT network works

The SWIFT network functions as a standardised global messaging system, not a payment settlement system. Understanding this distinction is essential to understanding how SWIFT payment processing works.

The three steps of SWIFT payment processing

A typical SWIFT payment follows three steps:

1. Payment initiation – the sender provides their bank with the recipient’s details, including the recipient’s SWIFT/BIC code, account number (or IBAN for European accounts), bank name, and the amount and currency to be transferred
2. Message generation – the sender’s bank generates a SWIFT message using standardised message types. MT103 is the standard format for customer credit transfers – single customer payments between banks. MT202 is used for bank-to-bank transfers. These standardised codes ensure clarity and minimise errors in payment instructions
3. Payment settlement – the SWIFT message is transmitted through the secure SWIFT network to the recipient’s bank, which verifies the message and credits the recipient’s account. If the sender’s bank and recipient’s bank do not have a direct relationship, one or more correspondent (intermediary) banks route the payment, each processing the SWIFT message in sequence

SWIFT codes explained

Every institution on the SWIFT international payment network is identified by a unique SWIFT code – also known as a Bank Identifier Code (BIC). SWIFT codes are 8 or 11 characters structured as follows:

• 4 characters – bank code (abbreviated bank name)
• 2 characters – country code
• 2 characters – location code (city or region)
• 3 characters – branch code (optional; “XXX” denotes the head office)

Providing an accurate SWIFT/BIC code is essential for any SWIFT payment to reach the correct institution. An incorrect code can result in delays, failed payments, or funds being sent to the wrong bank.

SWIFT GPI – real-time tracking

SWIFT’s Global Payments Innovation (GPI), launched in 2017, significantly enhanced the SWIFT network by enabling end-to-end payment tracking. SWIFT GPI allows banks to track payment orders in real time, providing transparency on payment status, fees deducted, and expected delivery times. GPI has reduced the uncertainty traditionally associated with SWIFT network transactions and has become the standard for most SWIFT payments today.

How long do SWIFT payments take?

SWIFT network transactions typically take 1-5 business days to settle, depending on several factors:

• Correspondent banks – if the sender’s bank and recipient’s bank do not have a direct relationship, one or more intermediary banks are involved, each adding processing time
• Time zones and operating hours – payments initiated near the end of a banking day may not be processed until the following business day; time zone differences between countries add further delay
• Currency exchange – transfers involving currency conversion take slightly longer due to FX processing
• Compliance checks – if any aspect of a SWIFT network transaction triggers AML or sanctions screening, additional verification may delay the payment. Larger amounts are often subject to more extensive checks

For urgent international payments, SWIFT GPI has improved speed significantly – with many GPI payments completing within 24 hours.

SWIFT payment costs

Fees for SWIFT transactions are typically between $20 and $50 at the sending bank, but this is only part of the true cost. Each correspondent bank in the payment chain may also deduct its own fees – typically $15-$30 per intermediary – from the transfer amount before it reaches the recipient. This means the recipient may receive less than was sent, often without clear visibility into how much was deducted or by whom.

Additional cost components include:

• Currency conversion markup – banks typically apply a margin of 2-4% above the mid-market exchange rate on SWIFT payments involving currency conversion
• Receiving bank fees – the recipient’s bank may charge a fee for incoming international transfers
• Annual SWIFT membership dues – for institutions connected directly to the SWIFT system

SWIFT payment example: a business sends €10,000 via SWIFT from a US bank to a supplier in Germany. The sending bank charges $35. Two correspondent banks each deduct $20. The German bank charges a €15 receiving fee. The total cost before exchange rate markup could easily exceed $90 – and if the rate applied includes a 2% spread, the effective cost on a €10,000 transaction rises further.

SWIFT GPI was designed in part to address fee transparency, making it easier to see what charges have been applied at each step.

Benefits of SWIFT payments

Despite the costs and settlement times, SWIFT payments remain the global standard for international transfers for good reasons:

Global reach – the SWIFT network connects over 11,000 financial institutions across more than 200 countries. Any business that needs to send or receive international payments is almost certainly working with a bank connected to SWIFT.

Security – the secure SWIFT network uses advanced encryption, two-factor authentication, and rigorous validation rules to ensure that every message is precisely formatted and authenticated before transmission. SWIFT provides compliance services covering KYC, sanctions screening, and AML monitoring. In 2022, the EU demonstrated SWIFT’s role in enforcing economic sanctions by prohibiting SWIFT from providing services to designated Russian entities.

Standardisation – standardised message types (MT103, MT202) and SWIFT codes eliminate ambiguity in payment instructions, significantly reducing errors compared to less structured international transfer methods.

Traceability – SWIFT payments provide a detailed audit trail for each transaction. With SWIFT GPI, end-to-end tracking is available in real time, giving both sender and recipient visibility throughout the payment journey.

Multi-currency capability – every SWIFT message contains a field specifying the target currency, and the SWIFT network accommodates foreign exchange confirmations and currency conversion requests alongside payment instructions.

SWIFT vs ACH: what is the difference?

The key difference between SWIFT and ACH (Automated Clearing House) is geographic scope and use case:

For businesses making payments within the US or using US-based banking infrastructure, ACH is typically faster and cheaper than SWIFT. For international transfers outside the US, the SWIFT system is the standard – there is no equivalent domestic infrastructure that operates globally.

For European businesses, SEPA (Single Euro Payments Area) provides a faster and cheaper alternative to SWIFT for euro-denominated payments within the 41 SEPA countries. ConnectPay supports both SEPA and SWIFT, allowing businesses to route each international payment through the most efficient available rail.

How to make a SWIFT payment

To make a SWIFT payment, you will need to provide your bank with:

1. Recipient’s full name and address
2. Recipient’s bank name and address
3. Recipient’s SWIFT/BIC code – 8 or 11 characters identifying the recipient’s bank
4. Recipient’s account number or IBAN (for European accounts)
5. Amount and currency to be transferred
6. Payment reference – a description or invoice number for the recipient’s records
7. Fee arrangement – who pays the correspondent bank fees (OUR = sender pays all; SHA = fees shared; BEN = recipient pays all)

Once submitted, the payment goes through your bank’s compliance screening before the SWIFT message is generated and transmitted through the SWIFT network. With SWIFT GPI enabled, you or your bank can track the payment’s progress in real time.

Which US banks use SWIFT?

All major US banks are members of the SWIFT network, including JPMorgan Chase, Bank of America, Citibank, Wells Fargo, and Goldman Sachs. The vast majority of US banks that handle international payments are connected to the SWIFT system either directly or through a correspondent bank relationship.

Security best practices for SWIFT payments

The secure SWIFT network incorporates robust built-in security, but businesses using SWIFT should also apply their own controls:

• Use dual approval processes – require at least two people to authorise any SWIFT payment to prevent fraud
• Verify payment details independently – always confirm recipient SWIFT/BIC codes and account numbers through a separate, trusted communication channel before initiating a transfer
• Be cautious with payment detail changes – requests to update a supplier’s bank details are a common fraud vector; verify any changes directly with the supplier by phone
• Monitor transactions – implement ongoing monitoring of SWIFT network transactions to detect unusual activity early
• Keep software updated – ensure all systems used to interact with the SWIFT system are kept current with security patches
• Use secure connections – always access the SWIFT network through secure, encrypted connections
• Educate your team – train staff to recognise phishing attempts and suspicious payment requests targeting SWIFT credentials

SWIFT also operates the Customer Security Programme (CSP), which sets mandatory security controls for all institutions connected to the SWIFT system.

Make SWIFT payments with ConnectPay

ConnectPay provides SWIFT payment access alongside SEPA Instant and multi-currency IBAN accounts through a single, API-first platform. Whether you are making international supplier payments, distributing cross-border payouts, or managing treasury operations across multiple currencies, ConnectPay’s infrastructure routes each payment through the optimal channel – SWIFT for global reach, SEPA for European speed and cost efficiency.

All SWIFT payments through ConnectPay are processed with embedded KYC, AML, and sanctions compliance, meaning your international payments meet regulatory standards without requiring a separate compliance function.

Get in touch with our team to set up SWIFT payment access for your business.

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