Understanding SWIFT Payments: The Global Messaging Network That Moves Money
What is SWIFT?
SWIFT, short for the Society for Worldwide Interbank Financial Telecommunication, is the backbone of international financial messaging. Founded in Brussels, Belgium in 1973, SWIFT was established to bring consistency and security to the way financial institutions communicate across borders.
Think of it as the global "language" that banks use to talk to each other — not to move money directly, but to send the instructions that tell banks how, when, and where to transfer funds.
Today, SWIFT is a member-owned cooperative, connecting over 11,000 financial institutions across more than 200 countries, making it the most widely adopted platform for international banking communication.
At its core, SWIFT enables businesses, banks, and financial players to interact seamlessly, replacing the Telex technology that was earlier in widespread use and has become a faster, more secure solution built for the digital age.
How Does the Process Work?
A SWIFT transfer is all about communication, not the physical movement of money. Here’s a simplified breakdown of how it works:
- Initiation: A customer requests a transfer at their bank typically including details of the originator and the beneficiary, the bank account, the currency and the amount of the transaction.
- Messaging: The bank sends a SWIFT message to the recipient bank (or through intermediary banks when a SWIFT relationship does not exist between two banks), detailing the transaction.
- Account Settlement: Behind the scenes, funds are moved using nostro and vostro accounts — a long-standing system of inter-bank accounts.
- Nostro Account ("ours"): A bank’s account held in a foreign bank.
- Vostro Account ("yours"): A foreign bank’s account held in the domestic bank.
These accounts enable the banks to settle amounts owed to each other without moving physical cash.
Key Features of SWIFT Payments
1) Global Reach
SWIFT connects a vast network of banks and financial entities worldwide, allowing for frictionless financial interactions across geographies.
2) Standardized Messaging
All SWIFT messages follow strict formatting rules — like the MT103 for customer transfers — which ensures consistency and reduces the risk of errors in transaction detail.
3) Security and Reliability
Security is baked into the SWIFT system. Messages are encrypted and delivered via a secure network, reducing the risk of fraud or interception.
4) Bank to Bank Communication
SWIFT doesn’t move money; it moves messages. These messages are the instructions that banks use to debit and credit accounts, often relying on intermediary or correspondent banks when direct relationships don’t exist.
What are the fees under SWIFT?
Transferring money through SWIFT will attract charges based on the currency involved, the volume of money being exchanged and whether Intermediary and Correspondent banks are a part of this transaction.
- Intermediary Banks: these are the facilitators that are playing an active role within a particular transaction. The intermediary bank is often named in a SWIFT transfer to ensure the funds are routed correctly
- Correspondent Banks: are financial instituitions that exist when there isn't a direct relationship between the 'sending bank' and the 'receiving bank' undergoing the SWIFT transfer process. They help maintain the nostro/vostro accounts that enable the settlements between banks
The presence of each of these facilitators will increase the fees and charges that become a part of the SWIFT transfer process.
Who uses SWIFT?
It’s not just banks. SWIFT is used by:
- Investment firms and asset managers
- Brokerage agencies
- Fintech companies and payment providers
- Multinational corporations and e-commerce platforms
- Clearing houses and foreign exchange desks
- Even freelancers and remote workers receiving international payments
Anyone needing secure, verified cross-border transactions can benefit from SWIFT's infrastructure.
Why is SWIFT Important for Glomo?
For fintechs like Glomo, SWIFT is both a foundational system and a launchpad. While newer payment rails are being developed for speed and cost-efficiency, SWIFT remains essential for:
- Establishing trust and credibility with banking partners
- Facilitating cross-border transactions in regions where alternative methods aren’t yet available
- Complying with international regulations and audit standards
- Expanding into new markets without reinventing the wheel
By integrating SWIFT, fintechs like Glomo can offer global reach seamlessly while layering in innovation — like faster front-end interfaces, automated compliance, and better customer experience — on top of a time-tested financial network.