If yousend money abroad, your priority is to guarantee that your payment will arrive at the correct destination. This is where BIC and SWIFT codes come in.
These codes are a combination of letters and numbers that identify the bank to which you are sending money. They are used to ensure payments reach the correct bank and branch – and that your money gets to the right recipient.
SWIFT codes are assigned by the Society for International Financial Telecommunications, which recorded an average of44.8 millionmessages per day in November 2022.
What is a SWIFT code?
A SWIFT code is a standard format of a BIC code (Business Identifier Code, sometimes also called a Bank Identification Code), which is used to identify banks globally.
All banks and financial institutions are assigned a BIC or SWIFT code, which is used to processinternational money transferssafely and securely using the SWIFT system.
Are BIC and SWIFT codes the same?
Yes, a SWIFT code is simply another name for a BIC code—there is no difference between them, and they perform exactly the same function. The name varies by institution, and it is often the case that a bank in the country you are transferring money from will use a SWIFT code while the one in the country you are sending money to uses a BIC code.
Are SWIFT codes the same as IBANs?
No, SWIFT codes and IBANs serve different purposes in international banking transactions.
A SWIFT code (also known as a BIC code) is used to identify a specific bank during an international transaction. As we've discussed, it's a unique code assigned to each financial institution and consists of letters and numbers. SWIFT codes are primarily used to transfer money between banks, especially international wire transfers.
On the other hand, an IBAN (International Bank Account Number) is used to identify an individual bank account for cross-border payments within the European Union (EU) and in some other countries. IBANs contain information about the country, bank, and specific account number. They're used to ensure the accuracy of transactions and to streamline international payments within specific regions.
Is a BIC/SWIFT code always needed?
If you want to send money abroad, you will need the recipient's BIC code. Likewise, if you are receiving a payment from overseas, the sender will need your BIC code. For any transaction that involves sending alarge amount of currency, the benefits for both parties are obvious.
As well as a BIC code, you will need an IBAN (International Bank Account Number) when making an international currency transfer. YourIBAN numberis a unique identification code for your bank account, detailing which country it is in, the account number and the sort code.
Where can I find my SWIFT/BIC codes?
You can usually find your own BIC/SWIFT code at the top of one of your bank account statements.
If you don’t know the recipient’s BIC code but do know the country and bank name, you can usually locate it using an online BIC code search tool. Alternatively, you can ask your bank if they will provide you with the BIC code for the bank to which you are sending money.
What do the numbers and letters on a BIC code mean?
A BIC code consists of eight or eleven letters and numbers: the first four are the bank code, and the next two are the country code. Following these are a two-digit location code and a three-digit branch identifier code.
Not all banks include the branch identifier code, which means they may have a shorter eight-digit BIC code. For example, Barclays’ BIC code is BUKBGB22.
Should I use a bank or currency specialist?
Once you have all the details you need to make your international money transfer, automatically turning to your bank may not be wise, as this can be one of the least cost-effective ways to send money overseas.
Banks tend to have much steeper overheads than currency specialists, so their charges for processing international payments can be high, and their exchange rates are rarely the most competitive.
A specialist is often able to charge much lowerinternational transfer feesbecause its operating costs will often be minimal. It can usually offercompetitive currency exchange ratesbecause it has access to more liquidity providers.
Foreign exchange specialists can also often provide access to a range of different tools to help protect you from market volatility. These include market orders, where you target a specific rate of exchange, and your currency is bought or sold automatically when the market reaches this rate, and forward contracts*, with the facility to lock in the exchange rate for up to two years.
Therefore, it’s well worth comparing the fees and charges from currency specialists with those of your bank before you send money abroad so you can be confident you are getting the best possible deal. This is important if you plan to transfer a large amount of currency, as costs can soon mount up.
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*Forward contracts may require a deposit
None of the information contained in this article constitutes, nor should be construed as financial advice. TTT Moneycorp Limited (company number 738837) is registered in England. Its registered office is at Floor 5, Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ. Moneycorp is a trading name of TTT Moneycorp Limited, which is authorised and regulated by the Financial Conduct Authority for the provision of payment services (firm reference number 308919). Date of approval 20/03/2024.
The above article was created for Telegraph Financial Solutions, a member of The Telegraph Media Group. For more information on Telegraph Financial Solutions clickhere.