When was Swift born?
For over half a century, Swift has been the predominant messaging network for international payments. Established in 1973 and initiating its first message within the network in 1977, Swift has become essential to the global economy. It is the sole ecosystem linking over 11,000 financial institutions across more than 212 countries. This extensive reach enables the cooperative to manage an estimated daily movement of $5 trillion in funds, communicated through millions of messages regarding international payments and securities transactions.
Understanding Swift: The Backbone of International Financial Messaging
Swift stands as the leading technology enabling financial institutions globally to send standardized, secure messages about financial transactions.
The acronym S.W.I.F.T stands for the Society for Worldwide Interbank Financial Telecommunication, accurately reflecting the organization's purpose.
It's a common misunderstanding to think that Swift directly manages payments; however, this is not the case. Instead, Swift operates as a messaging platform, not handling the settlements themselves. Its primary function is to facilitate a standardized communication method among banks around the world, ensuring seamless interaction regardless of differences in location, size, sector, or language.
To provide a clearer picture, let's delve a bit further into the company's background.
A brief history of Swift
Before the advent of digital tax systems and the computerization of the financial sector, banks communicated payment and transfer details using the Telex network.This method was slow, labor-intensive, and lacked security.
By the 1970s, it was evident that the burgeoning global economy required an advanced messaging system to meet its needs for the foreseeable future.
Carl Reuterskiöld, a forward-thinking CEO with extensive experience, persuaded 239 financial institutions across 15 countries to collaborate on developing and adopting a standardized communication system that would benefit all members involved.
In 1973, Swift was established in a modest 40 square meter (430 square feet) office in the heart of Brussels. By 1977, the year the first Swift message was transmitted, the network had expanded to include 518 institutions from 22 countries.
In its inaugural year, Swift facilitated the transmission of over 10 million messages for these institutions.
By 1987, Swift had broadened its membership to encompass financial institutions engaged in the securities and money markets.
Fast forward 25 years to a position of industry leadership, and by December 2022, Swift was handling 44.8 million FIN (Financial Information) messages daily, accounting for $5 trillion in transactions per day.
Who controls Swift?
The oversight of Swift is crucial due to its substantial impact on global financial stability. The power to disconnect a nation such as Russia from Swift has been deemed one of the most severe sanctions available, underlining the system's significant geopolitical influence.
Swift is under the stewardship of central banks from the Group of Ten (G10) and the European Union. Its governance structure comprises a board of 25 directors, who are elected by Swift's shareholders. This board is responsible for the governance and supervisory management of the Swift network, ensuring its smooth and secure operations across the global financial landscape.
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.
Today, Swift membership is accessible to a broad array of financial sector players including:
What Are the Requirements to Join Swift?
To join Swift, financial entities must undergo a four-step onboarding process, ensuring they meet certain prerequisites. These include demonstrating financial stability as per Swift's regional criteria, adhering to legal and regulatory standards like AML, KYC, and CTF, having the operational capacity with appropriate infrastructure and personnel, and providing legal documentation to verify business legitimacy. For comprehensive criteria, refer to Swift's official Corporate Rules and Knowledge Base.
What Are Swift's Core Functions?
Swift primarily automates interbank communication, serving as a messaging network. Financial institutions themselves manage the settlements.
In addition to selling proprietary software and establishing industry standards, Swift's system hinges on two main components:
- Swift Codes (BICs): These codes identify each financial institution within the network.
- Message Types: These are the standardized formats Swift uses for exchanging financial information among institutions.
What Constitutes a Swift Code (BIC)?
A Swift code, or BIC, is an 8-11 character alphanumeric identifier used by businesses within the Swift network to pinpoint financial institutions and their specific branches or departments.
Commonly, when referring to Swift, people are actually talking about the Swift code or BIC. Despite some misconceptions, Swift code and BIC refer to the same identifier and are not separate entities.
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 Do You Use Swift and What Are the Costs?
Once connected to SwiftNet, financial institutions can initiate message transmissions and monetary transfers. Essential details for these transactions include:
- Business Identifier Code (BIC)
- Message Code
- Recipient’s Bank Details
- Payment Amount and Currency
- Payment Purpose
- Proof of Funds
- Fee Responsibility
Swift ensures message encryption and secure delivery to the recipient institution. In cases where there's no direct commercial relationship, Swift facilitates payment through intermediary banks
What Does Utilizing Swift Cost?
Swift's position as the primary financial messaging network includes generating revenue through annual fees, transaction-based charges, and one-off fees related to the volume and type of messages sent. These costs, alongside the sender’s and recipient’s bank fees plus any applicable foreign exchange and trace fees, contribute to the overall transfer fee charged by banks. The expense of Swift membership varies based on the selected solutions, membership specifics, and required due diligence.
What's the Timeline for Swift Membership?
Achieving full Swift membership typically spans 3 to 6 months, contingent on the project's particular demands and the institution's dedication.
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.
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