Pop quiz: Is SWIFT a payment system?
If you answered “Yes”, you are wrong. SWIFT is not a payment system, it’s a messaging system used to communicate money transfers between two banks.
Shocking, right? Well, how does it actually work? Banks don’t text messages all day, they need to do something else as well!
If the two banks have a relationship (commercial accounts with each other), the transfer is done as soon as the SWIFT message has been received. The money form one’s personal account is transferred to the other person’s account via banks’ commercial accounts. The banks take a fee.
If the two banks do not have a relationship, the intermediary bank will be used to facilitate the process. For that, you will be charged an additional fee.
If there are two currencies involved in the transfer, one of the banks will do the currency exchange.
This was the TL;DR version of our newest article about how SWIFT payments work. If you are curious to learn more, make sure to check it out.