The Society for Worldwide Interbank Financial Telecommunication (SWIFT), legally S.W.I.F.T. SCRL gives the ability to financial institutions worldwide to send and receive messages about the financial transactions in accordance with required safety measures, using standardized form and software. SWIFT connects all members of their network using Business Identifier Codes, which is unique for each financial institution who is a member of the network. Business Identifier Codes are also known as BIC codes or SWIFT codes. To be able to send the information to another member, financial institutions shall have corresponding accounts with each other.
Each member pays joining fees and annual support fees. SWIFT also sets fees for each sent message. The fees are different depending on the types of messages and volumes.
Financial institutions cannot actually send money to each other, but they can send payment orders to each other. The payment order is a financial instrument according to which one bank or financial institution has to transfer funds to another party.
Main advantages of SWIFT network:
- SWIFT takes financial responsibility for delivery of message;
- Safety of information while sending using SWIFT network
- Global monetary informing and reference information guidelines. The utilization of normalized messages guarantees that information traded between foundations is unambiguous and machine amicable, working with computerization, decreasing expenses and relieving hazards.
There are different ways to connect to the SWIFT network, such as:
- Direct connectivity
- Indirect connectivity
Direct connectivity
Direct connectivity through SWIFT is performed when the financial institution applies to SWIFT and gets its own BIC code. Direct connectivity gives the ability to be connected with a secured net of SWIFT members and exchange information and payment orders with other members. For this type of connection, there are required to employ certain software developed by SWIFT.
Main features:
- Working with a solitary party – SWIFT
- The database is aimed at the customers’ needs
- The protection of dataflow
- Reduces the cost of messages compared to using of indirect connectivity
Indirect connectivity
Indirect connectivity is performed when the financial institution uses BIC code of the other financial institution which is SWIFT member. Indirect connectivity is also named by SWIFT as bureau service. A bureau service provides affiliates with a cost-effective solution to send SWIFT messages without the need to employ required software internally. A bureau mostly provided by the special organizations authorized by SWIFT. This type of connectivity is also called shared connectivity.
The financial institution can also approach SWIFT member to use their BIC code. It can be performed either with the personal interface of software that financial institution has and to execute message it uses BIC code of SWIFT member, or the financial institution approaches SWIFT member with particular payment order and SWIFT member executes it with their own interface of the software. In this case, financial institution enters into agency agreement with the SWIFT member.
Our legal company can help you to connect to SWIFT network. Contact us to find out more details.