The dire need for migrants to send money overseas has climbed up a notch each day. This unstoppable momentum of remittance inflows is due to the necessity to meet basic needs through international earnings. With the increasing amount of money being transferred from abroad, expatriates are now searching for answers to what goes behind the process of international remittance. SWIFT Code is one of the primary and critical requirements when sending money abroad to your loved ones. You can find several methods to transfer funds across borders, but can any method lets you make a transaction without a swift code? Let’s figure it out.
Cross-Border Money Transfer Methods
There are various methods by which one can send money overseas. Whether you use traditional banking services or online remittance service providers as a source to send your money, both need to identify the specified receiving bank. In order to do that, codes are allocated for the specific bank you need to send your money to. Internationally, there are two most popular methods of identifying banks. One is through the Society for Worldwide Interbank Financial Telecommunications (SWIFT), and the second is through the International Bank Account Number (IBAN).
But the question arises: do you always need a SWIFT code to transfer your money overseas?
If that is a question you need answers to, you have come to the right place. This blog post will answer all your queries about “what is a SWIFT code, and why is it required for your international transactions?”
What is SWIFT Code?
A SWIFT code is an information provided to banks from a networking system that authorises those banks to send or receive money internationally. Empirically, SWIFT codes are used by banks when transferring money between a standard format of Business Identifier Codes (BIC). But why is SWIFT helpful code?
Use of SWIFT Code:
Swift code is usually required to process an international money transfer. The primary purpose of the SWIFT code is to identify the specific bank account for verification of international transactions. It can usually be found as an “8 or 11-digit” figure present on your bank account statement. Basically, these numbers represent your bank branch.
What Does SWIFT Code Look Like?
SWIFT Codes usually carry the bank, location, country, and branch codes linked with the transaction. The diagram below shows how it represents each factor:
As seen in the figure, the first four characters represent the bank code, the second set of two letters is the
country code, and the third set of two characters is the location code, a combination of letters and digits. In contrast, the fourth set of combinations is the branch code.
But what if you or your bank does not facilitate SWIFT codes? How will you be able to send money overseas? Or where will you get the SWIFT code? Find the answers below.
Is it possible to send money cross-borders without a SWIFT code?
SWIFT codes are essential for international remittances when transferring money from big financial institutions. ACE Money Transfer, for example, requires a SWIFT code for bank transactions. Basically, it is a bank requirement from which the transaction is processed. Some banks like Credit Union do not require SWIFT codes, while most international remittance providers do.
Technically, you can send money online without SWIFT codes. But it is as if you are sending a letter without a postal code. The lack of BIC will cause the payment to fall out for manual repair. And invariably slow the payment process down. These payments may not just be slowed but can also get cancelled, rejected or returned, with a few service charges applied.
Is it always necessary to have a SWIFT code for online transfers?
You do not always need a SWIFT code for international transfers. Initially, a SWIFT code is required to smooth the transaction process, which takes less time. But it is not always necessary as there are other ways to transfer money.
The D Format:
The D format for receiving bank details can accept local branch codes for a limited set of countries like UK sort code, German BLZ, Canadian RBC, and many other codes. This requires more work on the receiving bank’s side, as they have to look up the BIC for that specific branch or its head office to route the receiving amount and instructions.
Some banks and small financial institutions do not have connectivity to the SWIFT network. So when money is transferred through these small sources, there is no SWIFT code affiliated with these transactions. For this purpose, the sender’s international financial institution should possess a correspondent bank that acts as an intermediary bank. This intermediary bank becomes a source for the wire transfer. It will then send the money domestically through the ABA routing number of small banks or financial institutions.
Nevertheless, some ways can be used to send money without a BIC code, such as online transfers. Online money transfer seems to be the best solution for a safer, secure and smooth transaction process for international remittance.
Online money transfer is the modern-day solution for the remittance industry. It is a process that instantaneously sends your money online through financial service providers such as ACE Money Transfers. ACE helps its customers make transactions without any hurdles and with great ease. As their priority is their customers, ACE has excelled in the remittance business in hundred plus receiving countries. By providing its customers with the lowest transfer fees, ACE made it easy for migrants to send money online.
The only thing left for you now is joining the ACE family. So what are you waiting for? Join ACE now!