What is a SWIFT code?

International money transfers are rapidly increasing. The value of cross-border payments is estimated to increase from US $150 trillion in 2017 to more than US $250 trillion in 2027.¹

This article includes tips, suggestions, and general information. We recommend that you always do your own research and consider getting independent tax, financial, and legal advice before making any important decision.

Many financial institutions use SWIFT codes for international transfers to exchange financial information quickly and securely. Assigned by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), these codes are unique combinations of letters and numbers that identify individual banks and make international payments safer.²

The SWIFT network comprises more than 11,000 financial institutions worldwide. One of them is PayPal, which utilizes SWIFT codes for international money transfers.³

This article explains how SWIFT codes work, ways of finding and using SWIFT codes, and how identifiers can make banking more secure across borders.

How SWIFT codes facilitate international transactions

The SWIFT network helps to streamline international bank transfers and settlements by giving participating financial institutions a unique ID code (also called a Bank Identifier Code, or BIC). The code can identify each institution’s name, country, city, and branch, making SWIFT transfers a way to send money securely.⁴

But what is a SWIFT transfer exactly? It’s similar to a wire transfer, and it facilitates international payments. Many people use it to send money abroad efficiently and securely, for reasons such as:

• Sending money to friends or family in another country
• Reserving a holiday rental property
• Paying tuition or other services

Understanding the structure of a SWIFT code

To understand how SWIFT codes work, it’s important to look at the SWIFT code breakdown. Each unique code comprises 8 or 11 characters, which include the institute code, the country code, the location or city code, and an optional branch code.

For example, PayPal UK Ltd. has been assigned the SWIFT code PYPTGB22.⁵

• The first four characters identify the institute: PYPT for PayPal
• The next two characters identify the country: GB for Great Britain
• The last two characters identify the SWIFT code location: in this case, the location is 22

Finding and using SWIFT codes

Before sending money or receiving payments from people abroad, finding SWIFT codes and writing them down first can help streamline the process. Financial institutions that are part of the SWIFT network may include the SWIFT or BIC code on their bank statements or websites. Another way to find the code is to phone the financial institution directly or use BIC Search on the SWIFT website.⁵

Sending money abroad can involve potential transaction fees, including fixed transfer fees, currency conversion fees, and percentage fees. By contacting the financial institution, senders can find out what fees may be associated with their transfer.

The difference between SWIFT code and IBAN

When sending money to and from the UK, there is a choice of two internationally recognized codes that can be used to facilitate the process: a SWIFT code and an IBAN. The latter is an acronym for “International Bank Account Number.”

While a SWIFT code identifies a specific bank for an international money transfer, an IBAN identifies a unique bank account. It’s up to the bank and country to specify whether a SWIFT code, an IBAN, or both are needed to complete an international transaction.

When considering whether to use an IBAN vs. SWIFT code, it often comes down to location. SWIFT codes are used by financial institutions in more than 200 countries and territories worldwide. IBANs are commonplace in banks across the EU and neighbouring countries, including the UK, Switzerland, Turkey, and Israel. They are not typically used in the United States or Canada.⁶