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SWIFT vs Local Transfers: Which One Should You Choose?

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SWIFT transfers and local transfers are two ways to transfer money across borders, but they differ.

SWIFT transfers use a global network of secure banks for electronic payments, while local transfers use a national network to send money to a recipient's local account.

SWIFT transfers are more secure and suitable for larger transactions but have higher fees and longer processing times. Local transfers are cheaper and faster, making them ideal for smaller transactions.

Following the increase in cross-border business activity and transactions, understanding the best payment option to transfer money from one country to another is crucial for a business.

Most businesses use SWIFT wire transfers to process their cross-border transactions and accept payments from customers.

While SWIFT transfers can be a good option for some companies, their popularity is mainly attributable to companies being unaware of other equally effective methods than a SWIFT transfer. 

This article outlines everything you need to know about local transfers and SWIFT transfers to ensure your business makes the right decision when choosing which to use to process their payments.

What are SWIFT transfers?

The term 'SWIFT' stands for the Society for Worldwide Interbank Financial Telecommunication and refers to the worldwide network of banks that work collaboratively to provide their customers with the service of international bank transfers.

SWIFT transfers offer a secure and convenient electronic global payment system.

This process of international bank transfers is also more commonly known as 'wire' transfers, which have become one of the most popular ways to send money across borders.

💡Did You Know: SWIFT network connects more than 11,000 banks, financial institutions, and corporations in more than 200 countries and territories

How does a SWIFT Transfer work?

All transfers are processed through the payer's bank, which is debited. The money is then routed through several banks within the network and credited to the recipient's account.

For example, Company ABC Limited, based in the United Kingdom, needs to transfer money from its JP Morgan bank account to its supplier's HSBC bank account in Hong Kong. In this case, the funds would be processed through SWIFT (the Society for Worldwide Interbank Financial Telecommunication).

A SWIFT payment uses a unique code known as 'SWIFT Code.' It identifies banks and other financial institutions when an international bank transfer is made. Therefore, each time you want to make a SWIFT transfer, remember to provide the SWIFT code of the recipient's bank.

How can you find the SWIFT code of a bank?

Although some banks directly highlight the SWIFT code on their bank statements, this is not the case for all banks.

The best way to find a bank's SWIFT account is to check your bank statement or to visit the bank's website. Always keep in mind that you are not required to provide your bank's SWIFT code.

It is always the recipient's SWIFT code that is being asked for. Ensure to avoid confusing a SWIFT code with an IBAN, which is much longer than a SWIFT code as it contains more bank information.

💡Tip: You can use this website to find the SWIFT code of any bank.

How much does a SWIFT transfer cost?

The cost of a SWIFT transfer depends on the particular bank or financial institution used to process the payment.

This usually involves two types of charges; fees and the exchange rate.

Fees are set by each bank and usually range from USD$5 to USD$20 per transfer or more, depending on the amount being transferred and whether the transaction is complex. You may also be charged a 'correspondent bank fee' if an intermediary bank is used to transfer the money. In urgent situations, you can speed up the processing time of your payment by paying a priority payment fee.

Next up is the exchange rate. Traditional banks usually don't offer their customers the best exchange rates. The rate they give you will depend on how much money you want to transfer. Note that fees can be higher if smaller amounts of money are sent.

How long does a SWIFT transfer take to be processed?

The processing time for a SWIFT transfer can vary depending on several factors, such as the destination country, time zones, and recipient bank's processing methods. It also depends on the number of intermediary banks or other financial institutions involved in processing the transfer. Moreover, fraud prevention checks can cause delays if the SWIFT network highlights any suspicious account activity.

💡Did You Know: Typically, the funds take 1-4 business days to reach the recipient's bank account.

What is a local transfer?

A local bank transfer involves sending money to a recipient's local bank account through a network of financial institutions. An intermediary organization or financial institution facilitates the transfer by communicating between the payer and the recipient. This process is also known as a remittance. By using local payment routes, it eliminates cross-border fees that are usually charged for SWIFT payments. As a result, you or your beneficiaries receive the full transaction amount without any deductions.

Some examples of domestic payment schemes include FPS in Hong Kong, SEPA in Europe, Faster Payments in the UK, and ACH in the United States.

How do local transfers work?

Let's illustrate local transfers with an example.

Suppose you are a Hong Kong-based company looking to make a payment to a business in France in Euros. Instead of using the more traditional SWIFT method, you could opt for a local bank transfer using the SEPA payment system.

By using SEPA, the recipient's local bank will process the payment in their local currency and settle it through the SEPA payment system. This means you can avoid the higher fees and unfavorable exchange rates often associated with international transfers. But also benefit from faster transfer times and greater transparency in transaction fees.

To initiate a local transfer, all you need are the recipient's bank details, including their local bank account number and a reference number.

How much do local transfers cost?

While SWIFT transfers were more commonly used for transferring money abroad, local transfers are now gaining popularity as they tend to suit customer preferences better.

Indeed, local transfers involve fewer intermediaries, which leads to no hidden fees. Additionally, local transfers are cheaper than SWIFT transfers because the payer can save on foreign exchange fees.

Did you know? At Statrys, local transfers can be up to 3x cheaper than international transfers. Learn more about our pricing here.

How long does a Local transfer take to be processed?

The processing time for a local transfer can vary depending on the banks involved, the amount being transferred, and the country where it is being made.

If you're transferring money between accounts at the same bank or between banks that have a partnership or network, the transfer can be processed almost instantly or within a few hours. However, the processing time may take longer if you're transferring money between different banks or involving different currencies.

Remember that weekends, holidays, and other non-business days can also affect processing times.

💡Tip: Typically, a local transfer can take 1-3 business days to complete, so make sure you plan in advance to avoid any delays.

Which one should you choose?

Every bank transfer option has unique characteristics, so it's important to understand them to select the one that best meets your needs.

To help you make the right decision, ask yourself the following questions:

What is the amount you're transferring?

The amount of the transaction can impact which payment option to choose, as local transfers typically support lower limits compared to SWIFT payments.

What type of information do you need to provide?

To ensure that your payment arrives at its destination, you will need to provide certain information. For SWIFT payments, you will need to have the recipient's bank name, account name, and SWIFT codes. While for local payments, you will need the recipient's bank details, including their local bank account number and a reference number.

Depending on the information you have, you can consider which option to go for.

How long does it take?

The concept of time usually refers to two things: How quickly can the payment be processed? And how soon can the recipient receive the money?

Local transfers tend to be faster than SWIFT ones regarding the speed of processing payments, as they are processed locally and don't have to go through intermediary banks. Additionally, local transfers often provide faster delivery times--the recipient can receive the money within a day.

What are the fees?

Fees are an important factor to consider. Local transfers have the advantage of not including intermediary banks, resulting in being cheaper. Moreover, you can save on foreign exchange and other associated costs.

However, the transfer must be initiated from the country associated with the currency in which the transfer is being made. For example, if you are transferring money to the United States, the transfer must be made in US dollars.

Is there any tracking?

Businesses sometimes need to provide proof of payment to their suppliers or vendors, and tracking is essential for this purpose. While tracking local payments is possible, keep in mind that methods vary depending on the payment system and country. For SWIFT, tracking is facilitated through the MT103 as it is an international payment.

How safe is the bank transfer?

Both payment methods are considered safe and reliable. Local transfers are typically processed through a secure banking network and are made between accounts within the same country; SWIFT payments are made through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, which is widely used and has a reputation for being secure and dependable.

⚠️ Caution: Always double-check the recipient's account details and be wary of scams or phishing attempts.

Final Words

In summary, both SWIFT and local transfers offer viable options for cross-border payments, each with its own advantages. Your decision on which option to choose should be based on factors such as speed, fees, and personal preferences. By evaluating your options and selecting the transfer type, you can ensure that your cross-border payments are efficient, cost-effective, and secure.

When you're looking for a financial service provider, make sure to find one that offers local transfers. Some of the things you should look for include fees and sign-up process, supported currencies, user-friendliness of their platform, and customer support.

One solution for you can be Statrys. With a quick sign-up, a user-friendly platform, customer support in multiple languages, and local payments up to 3X cheaper than international transfers, Statrys can help you make the most of your local transfers.

business account


What are SWIFT transfers?

The term 'SWIFT' stands for the Society for Worldwide Interbank Financial Telecommunication and refers to the worldwide network of banks that work collaboratively to provide their customers with the service of international bank transfers.

What are local transfers?


What's the difference between SWIFT and Local transfers?


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