BIC and SWIFT codes might seem confusing from the start, but it changes when you familiarize yourself with international transfers. Your bank or any other financial institution needs data to send or receive money worldwide. Apart from the recipient’s name and bank account, some additional numbers are used to help guide the money safely to the right destination. It includes both acronyms at the beginning of this article.
In this article, let’s understand the differences between BIC and SWIFT codes, their structure, how to find both, and when you need them. If you want to learn more, keep reading!
What are BIC and SWIFT codes?
Like in the little piece of spoiler that we shared earlier, BIC stands for Bank Identification Code, Bank Identifier Code, or Business Identifier Code. It consists of 8 to 11 alphanumeric characters used to identify a specific bank whenever you want to make an international transfer. This code ensures the money will safely arrive at the right place. For that reason, all financial institutions have one.
BIC was first adopted in the 1970s as a standard for business transactions by the financial community. Later, the International Organization for Standardization (ISO) also endorsed the code’s application for payments from one country to another.
So what about SWIFT? The Society for Worldwide Interbank Financial Telecommunication works pretty much the same way. Both terms are interchangeable among different banks and financial organizations. The country where you make a payment might call it BIC, while the country waiting for the money can refer to this code as SWIFT.
BIC and SWIFT codes identify who and where these institutions are. As our analogy from before, they are like a postcode for letters. So they work as a global identity for banks. You can also find them with similar names, such as SWIFT/BIC code, BIC/SWIFT code, SWIFT ID, or SWIFT identifier.
Are BIC and SWIFT the same as an IBAN code?
Despite BIC and SWIFT being the same, an IBAN code is different, although it shares a similar function. All three are essential for international payments and to secure that the money arrives at its final destination. IBAN stands for International Bank Account Number.
It recognizes local and worldwide transfers to an individual bank account. Nonetheless, both BIC and SWIFT help to identify bank branches.
Depending on the country receiving your money, you might need a BIC or SWIFT code in addition to an IBAN code. Banks in the USA, Australia, or New Zealand, will only ask for BIC. However, financial institutions within Europe and a few other countries may require a BIC and SWIFT code, plus an IBAN code.
What do both codes look like?
All BIC and SWIFT codes follow the same standard, using 8 to 11 alphanumeric characters. Not all banks use the three last numbers.
When it happens, this space can be replaced by a triple X, or it can be left out. In general, they look like the following structure — AAAABBCCDDD:
- AAAA: the first four characters (letters) represent the bank code, a shortened version of the bank’s name;
- BB: describe the country code (also letters), and they show from which country the bank is;
- CC: it’s the location code (letters or numbers), telling where the head office is;
- DDD: the last characters are optional and refer to the branch code, which specifies the bank’s head office.
Let’s see a real example to make it clear. For Itau, in Brazil, the SWIFT code is ITAUBRSPXXX. ITAU represents the first four letters and the bank’s name. BR is the code for the country, which is Brazil. SP stands for Sao Paulo, where the head office is located.
Finally, the triple X fills in the space for the branch code. Remember, it’s optional.
How and when do you use BIC and SWIFT codes?
Whenever banks and other financial institutions send and receive international payments, they rely on a network to ensure the money arrives safely. Here is where the BIC and SWIFT codes come in. Working as identifiers, they guide your transfer to the right place.
Once you receive the recipient’s code (whether it’s a friend, an employee, or family), along with all bank details, and confirm that everything is correct, you can start the transaction.
In other words, you need this code before making any payment from one country to another. So the bank — responsible for processing the transfer — can identify the recipient’s bank and send the funds to that account. Without it, the bank won’t know the payment destination on a global scale, which can lead to delays.
The same applies when you are receiving money from abroad. Your BIC/SWIFT code secures the transaction to the correct account. You can find it on your bank statements, by logging into your online banking, or after calling your local branch. Plus, some online tools allow you to search for the codes, but it always with double-checking with the recipient.
Is there a fee to use any of these codes?
International transfers wrapping different currencies are most likely to apply, not only fees but also the exchange rate when you use BIC and SWIFT codes. Banks usually adopt taxes above the mid-market, besides additional hidden fees, which can make this math a bit expensive.
So before your next transaction from one country to another, make sure to research all options available for your wallet’s sake.
At Husky, you can find fair exchange rates, low and transparent fees, no bureaucracy, and the most cost-effective option to deal with international remittances. Here you have a multi-currency account to store funds in different currencies in a single account and manage one or multiple payments. As a digital currency exchange platform, Husky works as an extension of your company and simplifies your financial routine.
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