What Is SWIFT: Everything You Need To Know About It

Last updated: 09/29/2025 14:41

In the world of global finance, SWIFT plays a central role, acting as the communications backbone that connects banks, financial institutions and markets across borders. While many people associate cross-border money transfers with banks or payment services, nearly all international interbank messaging relies on the SWIFT network.

In this article, we explore everything about SWIFT, including how SWIFT works, the services it offers, how users access it, the recent updates and its strategic relevance and future outlook in an ever-changing financial landscape.

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Latest News & Updates on SWIFT: SWIFT Tests On-Chain Messaging with Linea, Stablecoin Pending

In September 2025, SWIFT announced that it is experimenting with on-chain messaging in collaboration with Linea, , the Ethereum layer-2 platform developed by ConsenSys, and exploring a stablecoin-style settlement token as part of a pilot project.

More than a dozen major banks—including BNP Paribas and BNY Mellon—are reported to be participating in this pilot, which seeks to combine messaging and value transfer in one blockchain-enabled workflow.

This move suggests SWIFT is preparing to evolve beyond pure messaging into a platform that might directly facilitate settlement and bridge traditional banking infrastructure with decentralised systems.

These experiments are still in early stages; actual deployment would require addressing regulatory, technical, interoperability, and security challenges before becoming mainstream.

As a complement, SWIFT has also announced planned developments related to central bank digital currencies (CBDCs), intending to launch a platform in the next 12-24 months that integrates CBDCs with its existing messaging infrastructure.

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What Is the Society for Worldwide Interbank Financial Telecommunications (SWIFT)?

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a cooperative founded in 1973 and headquartered in Belgium. Its mission is to provide a secure, standardised messaging network through which financial institutions around the world can send payment, securities and treasury instructions, as well as other related messages.

Rather than moving money itself, SWIFT acts as a communications backbone; it does not hold accounts, manage funds or execute settlements. Instead, it acts as a trusted intermediary, ensuring that institutions exchange transaction instructions using common formats and identifiers.

SWIFT is collectively owned by its member institutions (primarily banks), and its governance structure reflects usage and geography. Members elect a board of directors and the shareholding structure is periodically adjusted to reflect activity levels, ensuring that more active institutions have a stronger voice while maintaining geographic balance.

Over time, SWIFT has evolved beyond basic messaging. Its services now include compliance tools, business intelligence, connectivity platforms and market infrastructure offerings. Today, SWIFT connects over 11,000 institutions in more than 200 countries, with millions of messages exchanged daily. SWIFT plays such a central role in the global financial system that exclusion from it is a powerful sanction tool in international finance.

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How does SWIFT work?

Messaging Infrastructure & Standards

At its core, SWIFT provides a messaging system called SWIFTNet, which supports different communication protocols (like FIN, InterAct, FileAct). Participating institutions format their transaction instructions using standardized “message types” (MT) or newer ISO 20022 message schemas, which ensures consistency in meaning and processing.

Every institution in the network is assigned a unique BIC (Business Identifier Code), often called the SWIFT code. This code (8 or 11 characters) helps identify the specific bank and branch in a secure and unambiguous way.

When a bank wants to instruct a payment (or security settlement), it sends a structured message over SWIFTNet to the counterparty bank (or an intermediary). That message carries instructions (e.g. “pay X to account Y”), along with supporting metadata (currency, charges, settlement route). The receiving bank parses the message and acts accordingly.

Routing, Intermediaries & Settlement

Because many banks do not maintain direct relationships with every other bank globally, SWIFT messages often route through correspondent banks or intermediaries. These intermediaries may deduct fees or translate between messaging formats.

The message instructs which accounts to debit/credit, but the actual funds movement happens through settlement systems (e.g. correspondent accounts, central banks, or settlement engines). SWIFT does not itself conduct the funds transfer.

In many cases, payments pass through multiple hops—originating bank → intermediary → final bank—and each leg must interpret and act on the messaging instructions. Delays or errors may occur if message formats or codes are misinterpreted.

SWIFT also supports tracking and status messages so that institutions can monitor whether a transaction has been accepted, rejected, or pending. In the recent decade, SWIFT introduced GPI (Global Payments Innovation), which enables near-real-time tracking of cross-border payments, greater transparency on fees, and more predictable execution times.

Security, Compliance & Governance

Because SWIFT is responsible for transmitting highly sensitive financial instructions, it employs robust security protocols, encryption, identity verification, and strict operational controls. Member institutions are required to adhere to security standards and audits.

SWIFT also integrates compliance modules—such as screening for sanctions, anti-money laundering (AML) rules, and Know-Your-Customer (KYC) requirements—to help member banks meet regulatory obligations.

Governance ensures that no single institution dominates decision-making; periodic recalibration of shareholding and directorship ensures alignment with activity levels and geographic representation.

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What Service does SWIFT Provide?

The SWIFT system provides a wide array of services designed to facilitate seamless and accurate business transactions for both enterprises and individuals. Below are some of the key services offered.

Applications

SWIFT connections grant access to various applications, including real-time instruction matching for treasury and foreign exchange transactions, banking market infrastructure for processing payment instructions between financial institutions, and securities market infrastructure for managing clearing and settlement instructions related to payments, securities, foreign exchange, and derivatives transactions.

Business Intelligence

Recently, SWIFT has introduced dashboards and reporting tools that empower clients with a dynamic, real-time overview of message monitoring, activity tracking, trade flow analysis, and reporting capabilities. These reports allow users to filter data based on region, country, message types, and other relevant parameters.

Compliance Services

To support member banks in meeting international regulatory obligations, SWIFT offers compliance tools such as sanctions screening, KYC/AML support, and centralized data services helping institutions identify suspicious transactions.

Messaging, Connectivity, and Software Solutions

At the heart of SWIFT’s operations is its commitment to providing a secure, reliable, and scalable network that ensures the smooth transmission of messages. Through its diverse messaging hubs along with software solutions and network connections, SWIFT delivers an extensive range of products and services that enable clients to efficiently send and receive transactional messages.

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How to Send Money with SWIFT?

Step One: Gather necessary information

To initiate an international transfer via SWIFT, you typically need:

Recipient’s full name and address
Recipient bank’s SWIFT/BIC code
Recipient’s bank account number or IBAN
Correspondent bank or intermediary info (if required)
Currency, amount, and purpose of payment

Step Two: Submit instruction at sending bank

You provide your bank (or online platform) with the details above. Your bank formats a SWIFT message (e.g. an MT or ISO 20022 message) and sends it over SWIFTNet to the recipient bank (maybe via intermediaries).

Step Three: Routing, intermediary checks, and settlement

The message may pass through one or more intermediary banks (correspondents) which route, parse, verify, and relay instructions. Each intermediary may deduct fee amounts. The final recipient bank, upon receiving a valid message, credits the recipient’s account. The actual movement of funds occurs across accounts held at intermediary banks or central banks—not within the SWIFT network itself.

Step Four: Confirmation and tracking

Using SWIFT GPI, sending institutions can receive status updates (e.g. “payment sent,” “in transit,” “credited”) and track the path of the payment. This transparency helps reduce uncertainty.

Costs and Timing

SWIFT transfers often incur multiple fees:

A charge by the sending bank
Charges levied by intermediary banks
Receiving bank fees

The total cost depends on the corridors, currencies, and number of hops in the chain.

Timing for cross-border SWIFT transfers can range from a few hours to several business days—delays may arise from differences in time zones, banking cut-off times, weekend/holiday schedules, or intermediary processing.

Risks and Limitations

Complex routing: Multiple intermediaries raise the possibility of miscommunication, fee stacking, or delays.
Regulatory compliance risk: If a payment triggers sanctions filters or AML checks, it may be delayed or blocked.
Cost inefficiencies: SWIFT is more expensive and slower compared to some newer fintech rails (e.g. blockchain-based solutions, instant payment systems).
Exclusion risk: If a bank or country is barred from SWIFT, it loses access to the mainstream international payment messaging network.

Still, for most large-scale, reliable cross-border transfers among traditional banks, SWIFT remains the de facto standard.

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Future Outlook of SWIFT: Will SWIFT Be Replaced?

Blockchain-based networks, stablecoin ecosystems and other decentralised settlement systems are increasingly being touted as rivals to traditional payment systems. SWIFT’s collaboration with Linea suggests that it is exploring ways to integrate or compete with these alternatives.

Additionally, regional or national systems (e.g. China’s CIPS and India’s UPI cross-border ambitions) may offer faster and more cost-effective solutions, particularly within regional trade blocs.

Despite the existence of new systems, SWIFT retains advantages in terms of its global scale, existing relationships, regulatory compliance, redundancy and reputation. To succeed, new systems must match or exceed SWIFT’s reliability, security, and interoperability.

Moreover, replacing SWIFT entirely would not only be a technical challenge, but also involve updating banking regulations, adapting central bank systems, overcoming inertia and coordinating across jurisdictions.

Rather than total replacement, a more likely scenario is hybrid coexistence: SWIFT could incorporate blockchain or tokenised elements (as in the current Linea pilot), while newer systems could coexist as alternative rails. This gradual evolution could preserve backward compatibility while enabling innovation.

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Conclusion

SWIFT remains a foundational pillar of the global banking infrastructure, enabling secure, structured messaging to be sent across borders by more than 11,000 institutions. Although it does not move money itself, its role as a messaging backbone is indispensable in contemporary finance.

However, SWIFT is not static. Its current pilot with Linea and experiments with stablecoin-style settlement suggest that the network is seeking to adapt to a future in which messaging and value transfer converge. Although significant challenges lie ahead in the form of regulatory, technical and institutional issues, the trajectory suggests evolution rather than obsolescence.

Understanding SWIFT is crucial for users and observers alike to grasp how global payments operate today and how they may transform in the era of tokenisation and digital assets.

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