For over 50 years now, one messaging network has dominated international payments.
Swift opened its doors in 1973 and delivered the first message within its network in 1977. Since then, it has become indispensable for the global economy as the only ecosystem that can connect 11,000+ financial institutions in 212+ countries.
This scale has allowed the cooperative to achieve an estimated $5 trillion in daily funds movement in the form of millions of messages about international payments and securities.
Few projects have the longevity and ingenuity to continue innovating and securely lead in a space this competitive for this long. Today we’ll go over everything you need to know about Swift as a beginner, but we’ve placed some golden nuggets along the way for our seasoned international payments pros.
What is Swift – intro to the world of cross-border payments
Swift is the most widespread technology for financial institutions to exchange standardized messages about financial transfers in a secure network.
The name behind the acronym S.W.I.F.T describes exactly what this company is – the Society for Worldwide Interbank Financial Telecommunication.
A common misconception is that Swift handles the payments directly, which is not correct. Swift is a messaging system – it doesn’t handle settlements. What it does is it allows banks worldwide to standardize the way they communicate with each other, no matter the location, size, industry, or language.
But before we go any deeper, here’s a bit more context about the company.
How did we end up here – a brief history of Swift
Before the tax machine and computerization of finance, banks relied on Telex to communicate about payments and transfers.
It was slow, highly manual, and insecure.
In the 70s, it became clear that the financial system needed a revolutionary messaging system to support the rapidly globalizing economy for decades to come.
Carl Reuterskiöld, an experienced, visionary CEO, convinced 239 financial institutions from 15 countries to develop and implement a unified system for them to communicate in, benefiting all the participating members.
Swift started in a 40m² (430ft²) office in the center of Brussels in 1973. And by 1977, when the first Swift message was sent, the network had already included 518 institutions from 22 countries.
Within the first year of operation, Swift had processed over 10 million messages for them.
In 1987, Swift’s membership expanded to include financial institutions operating in securities and money markets.
Skip forward 25 years of industry domination, and in December 2022, Swift reported 44.8 million FIN (Financial Information) messages accountable for $5 trillion per day.
Who controls Swift?
You might be thinking, we can’t give the authority over such an institution to just anyone because of how much influence on the international monetary order it has. After all, disconnecting a country like Russia from Swift was for years considered the ultimate punishment on the sanction list.
Controlled by G10’s and EU’s central banks, Swift shareholders elect a board of 25 directors, who govern the organization and oversee the management of the Swift system.
Who uses Swift?
Swift is used globally, and almost 60% of all cross-border transfers it handles are in USD. And even though outlier countries try to run their own systems – like China’s (CIPS) and Russia’s (SPFS), they are nowhere close in terms of technological efficiency, usability, and, most importantly, adoption.
Who can become a Swift member?
Over the years, Swift has expanded its reach in the financial community, and today it’s open for new members from a variety of niches.
- Banks
- Payment, securities, and treasury market infrastructures
- Broker/dealers
- Custodians
- Investment managers
- Fund participants
- Corporates
- Exchanges
- Matching utilities
- Clearing houses
- Other users of secure financial communications.
Swift membership eligibility criteria
Even though Swift is open to all financial institutions, not everyone can become a member. However, as any for-profit company, Swift is motivated to onboard all qualified businesses into its network as quickly and efficiently as they can.
The onboarding process with Swift includes 4 steps, and a company needs to provide exhaustive details about:
- Financial stability and financing level that meets Swift’s minimum financial requirements for your region.
- Compliance with all relevant laws and regulations, including anti-money laundering (AML), know your customer (KYC), and counter-terrorist financing (CTF) regulations.
- Operational capability with all necessary infrastructure, technology, and staff to operate Swift effectively and safely.
- Legal documentation that proves the legitimacy of the operation, like commercial register extract, articles of association, and other relevant corporate documents.
For detailed eligibility criteria, please, check the Swift Corporate Rules and the most recent Swift Corporate Rules Knowledge Base.
What exactly does Swift do
The primary functionality of Swift is the automation of interbank messaging, as it’s a messaging system first and foremost. This means that settlements are handled by the financial institutions directly.
The company also sells proprietary software and creates industry standards (which we’ll go over too), but the two key elements of the Swift system are:
- Swift codes or Business Identifier Codes (BIC) – used to identify the financial institution.
- The Message Types – used to communicate financial data between financial institutions.
What is a Swift code, a.k.a Business Identifier Code (BIC)
Your Swift code/BIC is an alpha-numeric 8-11 character code. Every business using Swift has one or multiple codes like this to identify financial institutions as well as their separate branches or departments.
When most people say Swift, they mean a Swift code, also known by its official name – BIC (Business Identifier Code). Many people think that Swift code and BIC are two different entities, which is not the case.
What does the Swift code/BIC look like, and how does it work
Any Swift code you see in the wild has the same standardized structure that gives you an instant identification for a financial institution.
- First four characters (letters only) – code of the financial institution
- Fifth and sixth (letters only) – ISO standard country code.
- Seventh and eighth (letters and digits) – institution’s city code
- Ninth, tenth, and eleventh (letters and digits) – optional part that identifies the institution’s specific branches, departments, and services. If not needed, just left as X
Industry standards created and maintained by Swift
The Organization for Standards (ISO) made Swift a Registration Authority for certain types of universal codes. There are two most important standards developed and maintained by Swift that identify and reference common types of financial data.
1. Swift MT (Message Type) standard – ISO 15022
ISO 15022 – is currently the most widely used standard for interbank communication in the world. It’s used for securities settlement and asset servicing, and it is to be replaced with Swift MX standard (ISO 20022) by November 2025.
Rolled out in 1995, ISO 15022 is based on the Swift MT (Message Type) standard.
Swift Message Type categories
If your operation is using Swift MT to communicate with other financial institutions, the codes you’ll use will fall under one of these categories and will start with corresponding numbers.
- Customer payments and cheques – MT 1xx.
- Financial institution transfers – MT 2xx.
- Treasury markets, foreign exchange, money markets, and derivatives – MT 3xx.
- Collections and cash letters – MT 4xx.
- Securities markets – MT 5xx.
- Treasury markets, precious metals – MT 6xx.
- Treasury markets, syndication – MT 7xx.
- Travelers’ cheques – MT 8xx.
- Cash management and customer status – MT 9xx.
You can see this full Message Type reference library by Oracle here.
While a classic and reliable communication means, the Swift MT standard is considered outdated. Which is why it is being replaced by a superior Swift MX standard or ISO 20022.
2. Swift MX standard – ISO 20022
ISO 20022 is the most up-to-date message standard for all financial industry players. Based on the XML protocol, it’s a flexible and scalable message type that allows businesses to work with a much wider range of data types and transfer it a lot more efficiently.
Key Swift MX/ISO 20022 benefits
- XML-based – allows to work multifaceted data and process data faster and more efficiently.
- Multilingual support for non-Latin alphabets
- Data-rich messages for enhanced data mining and reconciliation
- Regulatory compliance for easier regulatory compliance and reporting
- Enhanced reconciliation enables automatic reconciliation between invoices and payments.
As of November 2025, ISO 20022 will be the standard used for all payments between financial institutions using Swift. So right now, thousands of financial organizations worldwide are migrating their communications with others to a new standard.
- See the full ISO 20022 message definitions documentation here.
- And if you need to undergo a Swift MT to Swift MX transition, here’s the full list of MT to MX equivalency.
What is SwiftNet – what Swift infrastructure consists of
Swift’s messaging platform is called SwiftNet. In order to communicate with each other, financial institutions need to connect to it. There are several messaging services SwiftNet has for you.
- FIN – the oldest and still most widely used of Swift’s messaging services.
- InterAct – offers all the capabilities of FIN plus features like real-time messaging and real-time query-and-response options. InterAct uses the new XML-based Swift MX.
- FileAct – allows for bulk payment processing and is also used to transfer large batches of images, reports, operational data, and other message types.
- WebAccess – uses SwiftNet to let users securely upload and browse web applications and financial portals.
What is Swift GPI
Launched in 2017, Swift gpi (Global Payments Innovation) is a response to growing criticism of Swift’s speed and efficiency.
Swift gpi is a product inside SwiftNet that provides end-to-end payment tracking and visibility, a complete list of all gpi members, and a global view of banks’ adherence to the gpi rulebook. Even though any bank that joins gpi has to follow a strict transparency rulebook, already 4,000+ banks have onboarded and processed over $300bn a day.
How to use Swift
Once an institution is connected to SwiftNet, they can start sending messages and transferring money. The message must include
- Business Identifier Code (BIC)
- Message code
- Recipient’s bank details
- The payment amount and currency
- Purpose of the payment
- Proof of funds
- The party that pays processing fees
Swift encrypts the messages and delivers them to the receiving institution.
If you don’t have a commercial relationship with an institution you send money to, Swift will direct the payment through a series of intermediary/correspondent banks.
The cost of using Swift
Being the go-to messaging network for the financial world is lucrative, which often serves as a criticism of Swift. To make money, Swift charges financial institutions and market infrastructures yearly and one-off fees based on the services provided as well as the number, types, and volume of the messages sent.
When you make an international transfer, both the sender’s bank and the recipient’s bank charge their fees, not to mention foreign exchange and trace fees. This, along with the price of the Swift subscription cost is usually reflected in the transfer fee your bank charges.
The cost of your Swift membership depends on the solution you choose, membership details, and due diligence required.
How long does it take to become a Swift member?
For most financial institutions, becoming a fully operational Swift member usually takes anywhere from 3 to 6 months. But this of course, depends on the specifics of the project and the motivation of the institution.
How secure is Swift?
The good thing about Swift is that at no point do they touch the money being transferred, which means that the bulk of safety responsibility falls on the financial institutions.
In 2016 a group of hackers robbed Bangladesh Bank and took over $80m. Even though it wasn’t Swift’s fault, the company launched its Customer Security Program to ensure thousands of member organizations worldwide use a set of 27 security controls. Within a year, 99% of messages volume were transferred by companies who already complied with this list.
Customer messages are encrypted when stored on Swift systems or when leaving Swift data centers in geographical zones that match customers’ privacy regulations.
Swift alternatives for cross-border payments
Is Swift getting replaced any time soon? And if Swift is the new Telex, what is going to be the new Swift?
As of now, Swift is irreplaceable as a globally accepted interbank cross-border messaging system. But many companies are covering parts of Swift’s offering and creating niche solutions for specific use cases.
We’ve mentioned China’s and Russia’s homemade solutions, but there are also some private initiatives worth highlighting.
- Banking networks – Global ACH lets you move money between US and foreign bank accounts, using other country payment rails, including EFT, SEPA, BACS and BECS.
- Card networks – networks like Visa, Mastercard, or Amex are popular ways to process payments from foreign customers. Card payments using these networks can be a good option for cross-border transactions as they are widely accepted, convenient, and secure.
- Fintechs – fintechs can handle most of the work involved in processing cross-border payments and provide you with a solution that meets your specific needs at a much better price. At Payment Labs, we enable dedicated tailor-fit payment solutions for Esports Prize Payments, Sports payments, NIL payouts, and Agencies.
- Blockchains and cryptocurrencies can also be used to process fiat currency payments efficiently. Leading providers of blockchain cross-border payments include BVNK’s Global Settlement Network and Ripple/XRP or some of the Central Bank Digital Currencies (CBDCs).
The role of Swift in cross-border payments today and throughout the 2020s
Frictionless instant transactions, instant cross-border payments, and treasury services have been the go-to buzzwords for the financial industry for a while now. And Swift has faced a lot of criticism for the slow speed of transactions and convoluted fees that really add up.
Some would say that Swift still reigns solely thanks to the network effect – 11,000+ financial institutions is a formidable argument to stay connected. In addition, Swift recently started undergoing accelerated change to meet the industry demands in cross-border payments. But, of course, for an organization of this size, change comes hard.
Standards, reach, and technology quality aside, Swift is likely to remain the most trusted and widespread network for large-scale payments communications, mostly because it’s hard to imagine a new cooperation between central banks and financial institutions at this scale in the world today.
That said, for the time being, Swift isn’t going anywhere. And it’s good to have a cautious, trusted standard-setting body. This doesn’t mean, however, that it’s right for you – there are solutions that get your specific payment tasks done faster and cheaper.
If what it is you’re after is effortlessly managing cross-border payments with the ability to transact in 140+ currencies across 180 countries, with minimal returns of less than 1% – our team at Payment Labs has the perfect tailor-fit solution for your business. Schedule a call to get started with Payment Labs today.