How Long Do SWIFT Payments Take? Insights From 500 Payments

Despite the large number of cross-border payments being made daily, many people use SWIFT payments without fully understanding how it works and who is involved. 

As a prominent payment services provider in Hong Kong, we often get asked, “How long does it take for an outgoing payment to be completed?.” 

This highlights a common need for more payment transparency in our industry.

To shed light on this issue and offer businesses greater clarity, we have conducted an internal analysis of 500 outgoing payments to understand exactly how long it takes to transfer money. 

To give you some background, Statrys is a payment solutions provider with a Money Service Operator license in Hong Kong. We were founded in 2018 with the goal of developing the most functional payment services on the market while putting people first with personalized support. 

We now serve over 3,500 businesses and have processed over two billion dollars through our platform, and we are going to share what we have learned about SWIFT payments.

Without any further delay, let us get right into it!

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What is a SWIFT Payment?

A SWIFT payment, also commonly known as a SWIFT transfer, is a form of international money transfer facilitated by the Society for Worldwide Interbank Financial Telecommunication (SWIFT). It involves a message containing payment instructions sent from one bank to another. 

These banks can be in different countries, and the payment typically follows a secure and standardized process. Not all SWIFT payments are simple one-to-one transactions; sometimes, intermediary or correspondent banks may also be involved, which can affect both the time and cost associated with the transfer. 

Understanding the mechanics of SWIFT payments can provide valuable insights into the duration of these transactions, which is precisely what we're exploring in this article.

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The SWIFT Network Operational Framework

Before moving to processing time, let’s first understand the basics of the SWIFT network and how banks interact with it. 

This interaction largely determines the efficiency of the payment process.

Breakdown of Key Participants

• The Payer: The individual or entity initiating the payment.
• Payer's Bank: The bank from which the payment originates.
• The Receiver: The person or company receiving the funds.
• Receiver's Bank: The bank where the funds are deposited.

Plus, Correspondent Banks or Intermediary banks play a significant role. They act as middlemen, helping to move funds between banks from different countries or dealing with different currencies.

For smooth and safe communication between banks, the SWIFT system uses specific messages, such as:

• MT103: A message from the payer’s bank to the receiver's bank.
• MT202: A message that goes from the payer’s bank to intermediary banks, ensuring funds reach the right destination.
• MT910: A confirmation message indicating a successful credit transfer.

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Consequences of Delayed SWIFT Payments

Below are potential challenges businesses face due to delayed payments.

Cash Flow Instability

Every business, particularly smaller ones, needs a steady cash flow to handle expenses and costs. Thus, when payments are delayed, it affects the capability to manage finances and pay bills on time.

Missed Business Opportunities

In some sectors, business needs to pay faster to secure a deal. Therefore, faster payments lead to better opportunities.

Difficulties in Sealing the Global Trade Deal

Timely payments are often required to start shipping from international suppliers. Sometimes, the supplier will only ship your orders if they receive at least a partial, if not full, payment upfront.

Extra Costs

No one likes unexpected costs. However, businesses may face additional fees or lawsuits for not fulfilling their side of a contract on time.

Financial Instability Concerns

Some businesses run on slim profit margins, meaning they don’t have much extra money. If payments don't come in predictably, they may need to take out loans to keep things running.

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Our Methodology

We analyzed 500 specific SWIFT transactions on our platform to gain insights into payment processing times. Here's how we approached our study:

1. Sample Size: We studied 500 outgoing SWIFT payments.

2. Data Collection: We tracked how long each payment took, from when it started to when it reached its destination. Additionally, we observed if intermediary banks played a role in any transaction.

3. Source of Payments: The data was sourced from Statrys' international clients over half a year, ensuring a diverse representation.

4. Currency Breakdown: We looked into payments in various currencies:

• US Dollars: 205 payments
• Euros: 105 payments
• Great British Pounds: 65 payments
• Japanese Yens: 35 payments
• Swiss Francs: 35 payments
• Canadian Dollars: 30 payments
• Australian Dollars: 25 payments

5. Geographical Scope:

These 500 transactions had destinations in 54 countries, spanning six continents.

Our goal was to analyze the data and provide a comprehensive view, which would aid businesses in understanding and predicting SWIFT payment times better.

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Findings

General Timing

Our analysis of 500 SWIFT payments reveals that the average processing time was 20 hours, 7 minutes, and 30 seconds.

Notably, 62% of these payments, specifically 311 out of the 500, were processed and received within the same day, highlighting efficiency in many transactions.

Currency Matters

Diving deeper into the payment processing durations segmented by currency:

• USD payments showcased an average processing time of 16 hours, 55 minutes, and 21 seconds.
• GBP transactions were quicker, averaging 5 hours, 54 minutes, and 41 seconds.
• Payments in Euros demonstrated the most prolonged average duration of 22 hours, 32 minutes, and 18 seconds.

The Role of Intermediary Banks

Of the studied payments, 368 involved at least one intermediary bank. Every USD payment, accounting for 205 transactions, necessitated a routing through J.P. Morgan Chase Bank in the US, irrespective of the final destination.

This indicates J.P. Morgan Chase Bank serves as a vital intermediary for USD payments, likely due to its market dominance. As a major clearer for these transactions, JP Morgan Chase benefits from size, global reach, expertise, Federal Reserve access, risk capabilities, and strong industry relationships. Their standing as a foremost US bank enables them to facilitate USD transfers worldwide reliably.

Our data indicates that most payments require only one intermediary, with only a small number requiring two or more. On average, SWIFT payment involves 1.32 intermediaries, peaking at 4 for some.

Interestingly, we discovered that payments involving intermediaries did not necessarily take longer to process.

Payments involving intermediaries averaged 18 hours, 24 minutes, and 48 seconds. In stark contrast, transactions bypassing intermediaries took a longer 24 hours, 53 minutes, and 48 seconds. 

This underscores the idea that while adding complexity, intermediary banks do not necessarily deter speed, testifying to the current system's efficiency.

Patterns in Payment Timing

We also analyzed the timing of SWIFT payments. Most SWIFT payments were made and processed during workdays, particularly peaking on Tuesdays and Thursdays. A few transactions occurring over weekends or holidays understandably took longer, with Friday-initiated SWIFT payments taking over 23 hours, a slight delay compared with the average.

Our study identifies variances in payment processing times across countries. For instance, payments to France, Canada, the US, and the UK typically took less than 10 hours on average, while SWIFT payments to Japan, South Korea, India, and the UAE often took more than 40 hours. We will look into this further in the next section.

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Discussion

Based on these findings, it’s evident that several factors can influence processing times, making it essential for businesses to understand the dynamics at play.

Payment-related Factors

Payment Information Details

SWIFT transactions are instructions from a payer's bank to a receiving bank to transfer funds to a beneficiary. This underscores the imperativeness of accurate input from the sender. 

Information like the receiver's bank account name, bank account number, the receiver bank's BIC code, and corresponding address is paramount in ensuring transactional fluidity. Other essential details include the transfer amount, the currency, and references.

Operational Timing and Local Constraints

SWIFT payments are quickly processed on business days, meaning delays occur on weekends and holidays. For example, one payment was sent over Christmas in our sample, taking 5 days to be processed and received. Transactions can be submitted anytime, but bank account balances are updated only during certain hours. This may delay cross-border payments, especially with time differences.

The Payment Currency

The payment currency can determine processing durations. For example, US dollar transactions were notably swifter than their Euro or Swiss Franc counterparts, largely due to the efficient clearing systems in the US before reaching the recipient.

Country and Regulatory Influences

Regulatory Compliance Checks

Cross-border payments undergo strict compliance checks to prevent illegal activities such as money laundering and terrorism support. Although necessary to preserve financial integrity, payment process delays may result from these checks. Compliance checks must meet specific requirements set by each country, and their execution can be costly and disruptive to automated systems. A payment may be rejected or require manual intervention if it violates regulations.

Country-Specific Capital Control

Jurisdictions differ in their foreign exchange and transactional regulations, which can significantly impact payment processing times. For instance, we found that SWIFT payments in India had an average processing time of over 70 hours. This can be since all FX transactions are subject to specific permission from the Reserve Bank of India.

Technological and Infrastructural Dimensions

Technology Legacy

Although many financial institutions and market infrastructures have progressed in modernizing their systems, some that handle cross-border payments still need help. Issues like batch processing, limited real-time monitoring, and lower data handling abilities can hinder smooth international transactions. These older systems also make adopting newer business strategies and technologies harder.

Size and Capabilities of Financial Institutions

Larger institutions often wield an advantage in transaction processing times. Large banks typically have more resources, which allows them to handle more transactions in a given time. They may also require fewer intermediary banks and have formats and processes that align better with international standards, resulting in faster payments. Additionally, larger banks are more efficient and better equipped to manage complex and evolving regulations.

Recommendations

Ensure Accurate Payment Information Details

Ensure the recipient's bank information, such as SWIFT/BIC code, payment purpose, transfer amount, and available funds, is accurate. Remember, some banks might ask for the sender's ID. Correct details mean efficient payments.

Mind the Transaction currency:

Businesses need to be aware of the varying processing times for different currencies when time is a crucial factor in payment. For example, USD and GBP are generally faster than EUR or CHF.

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Consider Domestic Alternatives:

Consider domestic payment methods for in-country transactions. They can be both quicker and cheaper. For instance, instead of a 20-hour SWIFT payment, local methods like FPS in Hong Kong, SEPA in Europe, Faster Payments in the UK, and ACH in the United States.

Choose wisely the day to make the payment:

Our research indicates Tuesdays and Thursdays are the busiest. Payments made late on Fridays might only clear by Monday. Avoid transferring on weekends and holidays to ensure faster processing.