SWIFT transfer

SWIFT transfer is usually a cross-border transfer that is instructed using the SWIFT (Society for Worldwide Interbank Financial Telecommunication) electronic messaging network. Actual money is then transferred via international banks that hold commercial relationships and dedicated accounts called correspondent accounts. This is why it can take up to 4 - 5 days depending on the countries between which a transfer is made and the number of correspondent banks in between. Nevertheless, most transfers arrive within 1-2 business days.

What is required to send a SWIFT payment?

For most cases, the information required for a SWIFT transfer includes:

• Beneficiary name
• Beneficiary address
• Bank Account number or IBAN
• SWIFT (BIC) Code

The Beneficiary Bank Account Number or IBAN and SWIFT (BIC) Code are the most pertinent details to get right. Otherwise, your transfer may end up in the wrong hands and will be difficult or in some cases - even impossible to rectify!  Furthermore, certain countries and individual banks have very strict rules that require Beneficiary name details to be the exact match for the name of the Beneficiary Account holder - some Chinese banks being particularly strict about this rule.

For transfers to certain countries, usually emerging markets or countries with currency controls, additional information such as Beneficiary registration details or purpose of payment may be required. Occasionally, financial institutions may also require further information before they may proceed with your transfer to meet their regulatory obligations and protect their customers from money laundering and financial crime.

SWIFT Fees Explained

Unlike domestic transfers or low-cost local payments offered by some international business account providers such as HedgeFlows, SWIFT transfers usually incur additional fees. High street banks continue to charge their customers £15 or more for basic SWIFT payments. In addition, correspondent banks and the recipient bank may take additional fees, as explained below.

Correspondent banks often charge their own fees for transfers made via their correspondent accounts. By default, these fees are deducted straight from the funds being transferred – it is thus common for a beneficiary to receive less money than what was originally sent. In some cases it also can be unclear how many correspondent banks may be involved and thus the amounts they may deduct.

Some financial institutions also offer SWIFT transfers where the transferred amounts are shielded from such deductions as they commit upfront to pay correspondent banks their costs. This is called SWIFT “OUR” instruction and comes with a higher Sender’s bank fee.

Sender’s bank fees – determined by the financial institution you are sending money from. Numerous currency brokers offer headline zero SWIFT fee (SHA) and incorporate the cost in their exchange rate margin instead. HedgeFlows charges transparent fees for both Shared (SHA) and OUR charges instructions starting from £5. 

Intermediate bank fees - determined by the intermediate bank or financial institution that process the transfer as it is sent from the sender bank to the recipient bank.  In case when the SWIFT transfer is sent using SWIFT SHA, these fees are deducted from the amount sent.

Recipient’s bank fees – determined by the bank or financial institution of the recipient.

Correspondent bank fees – set by each correspondent bank involved in the transfer and can range between 0 and tens of US dollars per transfer depending on the arrangement between banks.

Exchange rate margin – if you transfer or receive foreign currency directly from/to your home currency bank account, your bank will automatically apply additional, often hidden margin on foreign exchange transactions. These fees may go up to 2.75% for the major high street banks in the UK.