What is a SWIFT code?

SWIFT codes are used to identify banks and financial institutions worldwide. They are used by the swift network to transmit wire transfers (money transactions) and messages between them. For international wire transfers, swift codes are always required in order to make transactions secure and fast.

These codes were initially introduced by the SWIFT organization as “swift codes” but were later standardized by the International Organization for Standardization (ISO) as “BIC” meaning “Business Identifier Codes”. Most people think B.I.C. stands for “Bank Identifier Codes” (“bank” instead of “business”) but that is incorrect since non-financial institutions can also join the swift network.

A “BIC code” can be seen by many different names, like “SWIFT code” (most common), “SWIFT ID”, “SWIFT-BIC”, “SWIFT address”, “BEI” (that comes from “Business Entity Identifier”), or even “ISO 9362”, which is the standard format that has been approved by the ISO organization. The acronym SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication.

In depth analysis of a swift code

Swift codes are broken down into sections, in the same way telephone numbers are broken into sections, and every section reveals some information about the institution that was assigned this code. They consist of eight or eleven characters. Whenever an eight-character code is used, then it is referring to the headquarters (main office) of the institution.Here is how an 11-character code is broken down and what each section of characters represents. Let’s take this imaginary 11-character swift code:

AAAABBCCDDD

It can be broken down to these sections:

AAAA – BB – CC – DDD

Section 1 (the first 4-characters “AAAA”): This code is used to identify the institution’s global presence (all branches and all divisions around the world). For example, “CHAS” is used for “JPMORGAN CHASE BANK”

Section 2 (5th and 6th characters “BB”): This two-letter code represents the country of this particular institution’s branch and follows the ISO 3166-1 alpha-2 standard for representing country codes. For example, “US” for “UNITED STATES”, “GB” for “UNITED KINGDOM”, CA for “CANADA”, etc.

Section 3 (7th and 8th characters “CC”): These characters represent a location code (e.g. “FF” is the code for “Frankfurt”, “KK” is the code for Copenhagen, etc.) and also the second character (8th in the B.I.C.) sometimes carries this information:

  • If it is equal to “0”, then it typically is a BIC assigned for testing purposes (as opposed to a BIC used on the live network).
  • If it is equal to “1”, then it denotes a passive participant in the SWIFT network.
  • If it is equal to “2”, then it typically denotes a “reverse billing” BIC, meaning that the recipient of the message has to pay for the message.

Section 4 (9th to 11th characters “DDD”): These final three characters form a “branch code” that refers to the particular branch of the institution. If this section is omitted, then we have an 8-character swift code that is assumed to refer to the HEAD OFFICE of the institution. Also, a typical naming convention is that in the case we are referring to the main offices of an institution, this branch code is “XXX”.

Your questions, answered

What are SWIFT codes?

A SWIFT code is a set of 8 or 11 digits that represents a bank branch. You’ll need to use one when sending money internationally. Find your SWIFT code here.

What does BIC mean?

BIC stands for Bank Identifier Code. It’s a set of digits that represents a bank branch for international payments on the SWIFT network. Find your BIC code here

What’s the difference between BIC and SWIFT codes?

SWIFT stands for Society for Worldwide Interbank Financial Telecommunication. It’s a global network for processing payments between countries. BIC stands for Bank Identifier Code, which refers to the set of digits you can use to send international payments.

In practice, many people use ‘BIC’ and ‘SWIFT’ interchangeably to describe the code for international payments. Find your BIC code here

Is a SWIFT code the same as an IBAN?

SWIFT codes are not the same as IBANs, but they do a similar job.

IBANs identify individual bank accounts for domestic and international payments. They’re mostly used in Europe, but other countries around the world are starting to adopt the same system.

SWIFT codes help to identify bank branches for international payments. They’re used all over the world.

Is a SWIFT code the same as a sort code?

SWIFT codes are not the same as sort codes, but they do a similar job.

Sort codes help to identify bank branches for payments within a country, while SWIFT codes help to identify bank branches for international payments. Find your BIC code here

Is a SWIFT code same as a routing number?

SWIFT codes are different to routing numbers, but they do a similar job.

Routing numbers help to identify banks by state in the US, making it easier to process domestic payments. SWIFT codes identify bank branches for international payments.

How does a SWIFT code work?

SWIFT codes identify bank branches for international payments. By doing this, they help banks to send your money to the right place.

Do I need a SWIFT code or an IBAN number?

It depends on the country you’re sending money to. In the Eurozone, you’ll always need an IBAN and a SWIFT/BIC code. Banks in the USA use SWIFT codes, but they don’t use IBANs. It’s the same in New Zealand too. More on IBAN numbers.

LEAVE A REPLY

Please enter your comment!
Please enter your name here