SWIFT Payments

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a global cooperative founded in 1973 that provides a secure, standardized messaging network for banks to exchange financial transaction information. Crucially, SWIFT does NOT transfer money — it sends instructions (messages) between banks. The actual movement of funds happens through correspondent banking relationships and settlement systems like Fedwire (USA), CHAPS (UK), or TARGET2 (EU).

Traditional SWIFT transfers take 1–5 business days depending on the number of correspondent banks involved, time zone differences, and sanctions screening. With SWIFT gpi (Global Payments Innovation), over 50% of payments are credited within 30 minutes and nearly all settle within 24 hours. For same-currency, direct-correspondent payments, same-day settlement is common. Delays are caused by sanctions screening, AML checks, and correspondent bank cut-off times.

An MT103 is the most widely used SWIFT message type for cross-border customer payments (wire transfers). It is a standardised instruction from the originating bank to the beneficiary bank, containing: the payer's details (Field 50), the beneficiary's details (Field 59), amount and currency (Field 32A), correspondent bank BICs (Fields 53a, 54a), and payment reference (Field 70). Every time you send an international wire transfer, an MT103 is generated.

A SWIFT code (also called a BIC — Bank Identifier Code) is a unique 8 or 11 character code that identifies a specific bank and branch globally. Format: [Bank Code 4][Country Code 2][Location Code 2][Branch Code 3 optional]. For example, DEUTDEDB500 = Deutsche Bank (DEUT) + Germany (DE) + Frankfurt (DB) + Branch 500. You can find your bank's SWIFT code on your bank statement, internet banking portal, or by calling your bank. The SWIFT BIC directory is available at swift.com.

Nostro and Vostro are the same correspondent banking account seen from two perspectives. NOSTRO ("our account") is the account that Bank A maintains at a foreign Bank B, denominated in the foreign currency. VOSTRO ("your account") is Bank B's term for the same account — Bank A's account held at Bank B. Example: SBI maintains a USD account at JPMorgan Chase. SBI calls it their Nostro account; JPMorgan Chase calls it SBI's Vostro account. These accounts are essential for SWIFT payments to clear and settle across currencies and borders.

These are SWIFT charge codes (Field 71A) that define who pays the transfer fees: OUR = Sender pays ALL charges (originating bank + correspondent + receiving bank fees). The beneficiary receives the full amount. SHA (Shared) = Most common. Sender pays originating bank fees; beneficiary pays receiving bank fees. Intermediary fees may be deducted. BEN = Beneficiary pays ALL charges. All fees are deducted from the transferred amount before crediting the beneficiary. For business payments, OUR is preferred to ensure the recipient gets the exact invoice amount.

SWIFT gpi (Global Payments Innovation), launched in 2017, is an enhanced layer on top of the existing SWIFT network. Unlike traditional SWIFT where tracking was impossible once sent, gpi provides: a unique UETR tracking code for every payment, real-time status updates visible to sender and recipient, mandatory same-day processing commitment, full fee transparency at each hop, and the ability to stop or recall an in-flight payment. As of 2024, over 70% of SWIFT cross-border payments use gpi. India's RBI has mandated gpi for all inward remittances.

ISO 20022 is the new international standard for financial messaging, using XML-based MX messages instead of the older MT format. It carries significantly richer, structured data — full beneficiary name and address, purpose of payment, LEI codes, remittance information — compared to the limited free-text fields in MT messages. SWIFT has mandated migration from MT to MX (ISO 20022) for all cross-border payments by November 2025. The key replacement messages are: MT103 → pacs.008, MT202 → pacs.009, MT940 → camt.053.