In plain words
Think of SWIFT as a secure postal service that only banks can use. It delivers letters that say “please pay €5,000 from my customer to your customer”. The letter does not contain the money. The money moves separately, when the banks debit and credit the accounts they hold with each other.
SWIFT is a cooperative owned by its members and based in Belgium. More than 11,000 banks and other financial institutions in over 200 countries and territories use it. 1 Because almost every bank in the world is on the network, it is the default way to send money internationally when no local system connects the two countries.
For a founder, the key point is this: SWIFT decides how payment instructions travel, but the speed, cost and reliability of a transfer depend just as much on the chain of correspondent banks behind it.
How it works
How a SWIFT payment travels
Messages go one way over SWIFT. Money follows through accounts banks hold with each other.
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1
The sender gives payment details
The recipient’s name, address, account number or IBAN, and their bank’s BIC, plus who pays the fees.
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2
The sending bank screens and sends a message
It runs sanctions screening and sends a payment message with a unique tracking reference.
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3
Correspondent banks pass it on
If the two banks have no account with each other, one or more intermediary banks move the money along, each checking the payment and sometimes taking a fee.
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4
The receiving bank credits the customer
It confirms the credit, and with SWIFT gpi the sender’s bank can see that the payment has arrived.
The terms you will see
BIC
The bank’s address on the network, 8 or 11 characters: bank, country, location and an optional branch. Often called the SWIFT code.
MT103
The classic message for a single customer payment. Banks still share a copy of it as proof that a transfer was sent.
pacs.008
The ISO 20022 message that replaced MT103 for cross-border customer payments, with structured names, addresses and remittance details.
UETR
A 36-character reference that stays with the payment from the first bank to the last, so anyone in the chain can find it.
SWIFT gpi
SWIFT’s service for faster, trackable payments. Banks report each step, so a payment can be followed like a parcel.
From MT to ISO 20022
For decades, SWIFT payments used MT messages, short text formats with limited, mostly free-text fields. In November 2025 the period in which old MT messages and new ISO 20022 messages could both be used for cross-border payments came to an end, and ISO 20022 became the standard. 2
The practical difference is data. An MT103 squeezed names and addresses into a few lines of text. A pacs.008 has separate fields for street, town and country, a purpose code, and longer remittance information. That makes sanctions screening more accurate, means fewer payments get stopped for manual review, and lets the recipient match the payment to an invoice automatically. For more on what this means for products, read SWIFT, ISO 20022 and the future of cross-border fintech products.
Why SWIFT transfers can still take days
SWIFT messages arrive in seconds. Delays come from what happens around them:
- Correspondent chains. Each extra bank adds a step, its own cut-off time and its own checks.
- Compliance holds. Any bank in the chain can stop a payment to ask about the sender, recipient or purpose.
- Time zones and holidays. A payment that misses a cut-off in one country waits for the next business day there.
- Poor data. A wrong BIC, a missing address or a mismatched name can lead to a return, which can take days.
Fees work the same way. With SHA or BEN, each intermediary can deduct a charge, so the recipient may get less than was sent. Inside the EU and EEA, rules generally require shared charges for payments in EEA currencies.
How fintechs connect to SWIFT
Option 1
Through a partner bank or provider
Your payment provider or bank sends SWIFT payments for you through its API. Most fintechs start here.
Option 2
Through a service bureau
You have your own BIC and SWIFT membership, but a specialist company runs the connection and security for you.
Option 3
Direct connection
You run your own SWIFT connection and meet SWIFT’s security requirements yourself, with yearly attestation. You still need correspondent accounts to move the money.
SWIFT in the UK, the EU and the Gulf
SWIFT works the same way everywhere, but how much you rely on it depends on the corridor.
| Market | Domestic and regional alternatives | When SWIFT is used |
|---|---|---|
| United Kingdom | Faster Payments, Bacs, CHAPS | Payments out of the UK in most currencies, and incoming foreign payments |
| European Union | SEPA for euros | Non-euro payments and payments outside the SEPA area |
| UAE and Saudi Arabia | Local systems such as Aani and SARIE, and regional ones such as AFAQ and Buna | Most payments to and from Europe, Asia and the Americas, including remittance corridors |
Example: paying a supplier abroad
Maya runs a small UK homeware brand and pays a factory in Vietnam in US dollars from her business account app.
- Sending. She enters the factory’s account number, bank BIC and address, and picks OUR so the factory receives the full $12,000. The app shows the fee before she confirms.
- Behind the scenes. Her provider sends a pacs.008 through its partner bank. A US correspondent bank passes the dollars to the factory’s bank.
- A question. The correspondent bank asks what the payment is for. The app shows the payment as “under review”, and Maya uploads the invoice from her phone.
- Arrival. The next day, the gpi tracker confirms the credit. The app moves the payment to “completed” and shows the UETR, which the factory can quote to its bank.
Common misconceptions
“SWIFT sends the money.”
It sends the instructions. The money moves through accounts that banks hold with each other.
“Once sent, nobody knows where a SWIFT payment is.”
With the UETR and SWIFT gpi, banks can see which bank holds a payment and what fees were taken.
“A fintech needs its own SWIFT connection to send money abroad.”
Most send through a partner bank or payment provider, and many never need a direct connection.
FAQ
Does SWIFT move money?
No. SWIFT carries secure messages between banks, telling them what to pay and to whom. The money moves by debiting and crediting accounts that banks hold with each other, often through one or more correspondent banks.
How long does a SWIFT transfer take?
Many SWIFT payments now arrive within hours, and most within a day or two. Transfers can take longer when they pass through several banks, cross time zones or are held for compliance checks.
What is a SWIFT code?
A SWIFT code, or BIC, is an 8 or 11 character code that identifies a bank in international payments. It shows the bank, the country, the location and sometimes the branch.
What is the difference between MT103 and pacs.008?
Both are messages for a single customer payment. MT103 is the older SWIFT format with limited free-text fields. pacs.008 is its ISO 20022 replacement, with richer, structured data, and has been the standard for cross-border payments on SWIFT since November 2025.
How can I track a SWIFT payment?
Ask the sending bank for the payment's UETR, a unique reference that stays with it from start to finish. Banks using SWIFT gpi can see where the payment is, which bank holds it and what fees were taken.
What do OUR, SHA and BEN mean on a transfer?
They say who pays the fees. OUR means the sender pays all charges, SHA means the sender pays their bank and the recipient pays the rest, and BEN means all fees come out of the amount the recipient receives.
Related terms
Sources
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1
S
Swift Swift: about the global financial messaging network
https://www.swift.com/ -
2
S
Swift ISO 20022 at Swift
https://www.swift.com/standards/iso-20022
