The volume of transactions and dollars that banks are transferring each day is just enormous. But in order to conduct these transactions banks need a way of identifying other banks, especially when the payment is going internationally. A SWIFT code is the standard for Business Identifier Codes (BICs) or routing codes.

What is a SWIFT code exactly?

For starters, “SWIFT” stands for the Society for Worldwide Interbank Financial Telecommunication. SWIFT is a member-owned cooperative through which much of the financial world, in particular banks, conduct their business. The code is a unique identification code for financial institutions. These institutions use the code when transferring funds among themselves, including wire transfers. The SWIFT code also allows these institutions to exchange messages.

How SWIFT codes are used

When you initiate a bank transfer, the payment instructions go through a secure network. The SWIFT network ensures the highest security level for cross-border interbank transfers and involves an intermediary bank. This bank is also known as a correspondent bank, and is used when two banks don’t have a direct relationship with one another. As noted earlier, each bank has a unique SWIFT code, which you can obtain by contacting it directly or visiting its website. By providing the code, you ensure that the right bank will receive and deposit the funds to your recipient.

Example of a SWIFT code



image explaining what a swift code is

In general, a SWIFT code will consist of either 8 or 11 characters which can be numbers or letters. The above image shows the SWIFT code for HSBC bank.  There are four components to the SWIFT code:

  • Bank code – this identifies the bank. So MRMD lets banks transacting with HSBC that they are transacting with HSBC.
  • Country code – this identifies the country the bank is located in. In the above example, the bank is located in the United States, hence US.
  • Location code – this identifies the city the bank is located in.
  • Branch code – this identifies the branch office of the bank. If the code ends in XXX, that usually indicates that it is the head office.