What Is a SWIFT Code?: Money Transfer Basics

When you transfer money between different countries, you will need quite a bit of information to make sure it’s done properly. There are two important numbers you’ll often need: SWIFT codes and IBANs. That naturally leads you to some questions: What is a SWIFT code? How about an IBAN? And do you actually need either of them to make a remittance?

The terms are simply shorthand ways that banks use to share information. SWIFT codes are more widely used all over the world. IBANs, on the other hand, provide information about bank accounts in certain countries.

Both SWIFT codes and the IBAN system can help to make international money transfers more efficient, and ensure that the money makes it into your recipient’s account. The primary difference between SWIFT codes and IBANs is the information they convey during the transaction.

What is a SWIFT code & how is it different from IBAN?

International transactions used to be difficult before banking networks introduced IBAN and SWIFT codes. Previously, there wasn’t a standard method of account identification that all countries recognized. Routing numbers were in place for domestic money transfers but not for cross-border payments.

That meant information used to identify an account in one country wasn’t always recognized by the receiving country. 

The lack of standardized identification methods meant errors happened often. Payments could go to the wrong person or could be delayed while banks worked to confirm details about where the money should go. Worst of all, payments could go missing, and it would be up to the customers and the bank to solve the problem, if they could.

The expense and trouble of international bank transfers was simplified thanks to the introduction of the SWIFT code in 1973 and the IBAN in 1997. Both methods still play an important role in international transfers today. 

SWIFT vs. IBAN: What’s the difference?

To sum it up quickly, a bank’s SWIFT code identifies a specific bank, while an IBAN identifies the sender’s or recipient’s bank account. 

Both enable the quick, accurate transfer of funds overseas, although they aren’t used by every country. For instance, the U.S. doesn’t use IBAN at all, though you will still need it if you are transferring money to a country that does use it. Read on for more information about each type of code.

International Bank Account Number (IBAN)

IBAN is an acronym that stands for “International Bank Account Number.” It makes it easier to identify a bank’s country and the specific account holder during the transfer.

The IBAN also helps banks confirm that a transaction’s details are accurate because the number begins with a two-digit country code, followed by two numbers, followed by up to thirty-five unique characters. 

The International Organization for Standardization (ISO) introduced IBAN in 1997. The ISO has long led various standards for the world’s banking system. However, the European Committee for Banking Standards (ECBS), which is the modern European Payments Council, originally raised concerns about the flexibility of early IBAN standards. 

In response, the ISO reworked the standards that required the IBANs for each country to be a certain length. It also required the use of only uppercase letters. 

Society for Worldwide Interbank Financial Telecommunication (SWIFT) code

SWIFT stands for the “Society for Worldwide Interbank Financial Telecommunication.” You might also see these referred to as “SWIFT/BIC codes,” “BIC numbers,” or “Bank Identification Codes,” but all of these terms refer to the same thing.

The SWIFT network is used by financial institutions around the world to securely share information and instructions. The system relies on standardized codes, with each specific bank (and sometimes each bank branch) having its own unique eight- to 11-character code.

Since its introduction in 1973, the SWIFT number (really an alphanumeric code) remains a common bank identifier for international payments and funds transfers. The standard format of each code goes like this:

• The first four characters consist of letters; they are the bank identifier codes.
• The next two characters consist of letters and give the country code.
• The next two characters can be letters or numbers and give a location code within the country.
• The last three characters can be letters or numbers and are optional, providing details about the specific branch code.

With the use of the SWIFT system and IBANs, banks can reduce the risk of error and process international transfers with much greater speed and accuracy. 

You can find SWIFT codes by logging into your account or contacting your bank. The codes are often posted on the bank’s website, and they may have different codes for different currencies.

Do you need to use an IBAN?

When making an international wire transfer, your bank will ask you for details regarding the intended recipient. One detail they may ask for is the recipient’s IBAN number, which can be found on a bank statement or by contacting the bank. 

If you make a lot of international wire transfers, you are likely to become familiar with IBANs because you need to provide them as part of financial transaction details. The IBAN system has become an international standard, especially in European countries, the Middle East, and the Caribbean. 

However, newer app-based methods for transferring money overseas don’t require you to know the IBAN or the SWIFT code in most cases.

Do I need an IBAN or SWIFT code to use Remitly?

Usually, no. If you use Remitly, we make it as easy as possible to complete your transfer. You don’t have to remember how a SWIFT code works or be able to find it quickly because you don’t need to enter one. What’s more, we usually don’t need an IBAN code to complete your transaction. 

We make it easy for you to send money to friends and family in countries all over the globe, including the Philippines, Mexico, or India.

Here’s all you need to do to get started:

1. For first-time users, download the Remitly app and create an account. Then, select your destination country.
2. Enter the amount you wish to send.
3. Select your preferred method of delivery, which will vary depending on your country but can include: bank deposit, cash pickup, mobile wallet, or home delivery.
4. Enter your recipient’s information, like their name and address. You will need their bank details if you’re sending to their account. For many countries, their bank account number is sufficient. However, some countries, such as Pakistan, ask for an IBAN instead. The Remitly app will prompt you for the appropriate number.
5. Enter your information as the sender.
6. Select your method of payment, and enter your payment details.

Transfers under SEPA (Single Euro Payments Area) in the European Union require a bit more security. SEPA payments need an IBAN and a SWIFT/BIC code because they are Economy transfers from a bank account to another bank account.

Make better international transfers 

Though it might seem like a small detail, a SWIFT code is an important piece of the puzzle when transferring funds. While it’s good to know what a SWIFT code is, the Remitly app will help you so you don’t have to know the SWIFT code when transferring money. You can rest assured that the money will get there safely and quickly.