SWIFT and BIC Codes – What are They Needed for?
What is BIC/SWIFT code? The abbreviation SWIFT carries the meaning “Society for Worldwide Interbank Financial Telecommunications” – the name is long and from this, it becomes clear why the whole world knows it in abbreviated form. Thanks to this system, more than 10,000 banks and other financial institutions in the world have established standards and rules to carry out transactions through a secure network at the international level.
At the same time, the BIC in its entirety means the identification code of the bank. Sometimes this code is called SWIFT BIC or ID or just a SWIFT code, which can be easily confused, but it is important to remember that they are one and the same.
Is BIC the Same as SWIFT Code?
Explaining the function of the BIC, we can say that it identifies the bank in such a way that it is clear in another country where this bank is located and who it is – this also applies to other financial institutions. It is multifunctional – it is needed not only for international bank transfers and for SEPA payments, but also for regular exchange of notifications to confirm the correct sending address. Based on the fact that this code is needed everywhere and for everyone, access to it is facilitated – it can be found in any bank statement or in client account details in the protected section of the online bank.
Is BIC and SWIFT the same? Talking about history SWIFT appeared back in 1973 and today is accepted by banks and customers around the world in more than 200 countries. In addition to the main system, a new version was released in 2018 – SWIFT GPI, which is based on blockchain technologies and cryptocurrency assistance. This system allows you to send payment within 30 minutes or less between countries. By the end of 2020, as experts expected, SWIFT has become the standard for payments abroad. Both BIC and SWIFT codes are regulated by the international standard ISO 9362 and this means that it is not possible to make payment in Europe without the international bank account number being processed.
More About BIC Code Meaning: the Reason to Use
As mentioned earlier, this abbreviation stands for bank identification code, which usually consists of 8-11 characters. It performs the function of identifying a specific bank during a transaction between countries. In other words, the BIC is like the postal code of each bank, thanks to which the sender can be sure that his money was sent to the address.
Learn more about SWIFT: Is It Really Different to BIC?
As mentioned above, this system implies a whole society that specialises in financial telecommunications between banks around the world. In other words, it is a worldwide network that processes payments between almost 200 countries in the world.
Where Can I Get a BIC Code?
Everyone receiving an international payment must know their BIC code. It is easy to find – usually just checking bank statements is enough, but since they may not be at hand, you can always log in to online banking and check it with a client account. In the case when the second option does not work, you can always call the local branch of the bank.
Each sender also needs to know the recipient’s BIC code when he wants to make an international transfer. It is enough just to ask the person to whom the payment should be sent and he will give it without any problems. But at the same time, it is very important to check this code twice after entering it, since incorrect data can lead to transaction errors: at best, the payment will be returned or blocked, and at worst, it will be sent to someone else’s account.
In What Situations to Use SWIFT/BIC?
What’s a BIC code? The use of this code is an integral part of the international transfer process. SWIFT is considered to be associated with IBAN, which in turn stands for International Bank Account Number. During the transaction, at the stage of completion of the transaction, the bank that receives the money sends a SWIFT message, which means that the funds have been received, and this message also contains all the information about the transfer that was made. Without the SWIFT code, any transaction abroad would not take place – this is a virtual address that indicates to banks where the money should be sent.
In a normal payment transaction, a supplier abroad will most likely need to enter a SWIFT code. Or in the reverse situation, when the client wants to send something from another country, he will ask the supplier for his SWIFT. This really speeds up the process of payment or payment transactions, and last but not least, it ensures the security of transferring funds abroad. Therefore, each supplier should indicate information about SWIFT in invoices for the convenience of customers.
How SWIFT and BIC Codes Work
Transferring money abroad is a chain of communications between many banks. Intermediate banks are called correspondents. They work together to ensure that the recipient receives their payment from the sender from different parts of the world. First of all, the BIC code as a postal address, which will determine which bank the payment will go to – this simplifies the client’s life. He needs to get the SWIFT number of the person or company to whom the transaction will be sent, and then just go to the local branch or open Internet banking and make an international payment.
SWIFT Code vs. BIC Code: Is the Use of BIC or SWIFT Numbers Paid?
The answer to this question is yes. Many banks around the world charge a certain fee for using their payment processing services, so the sender will pay a certain amount more in order to use the BIC code in the transaction. If there is still a good chance that the sender will pay transaction processing fees requested by the respective banks while the payment is still in transit.
In order to better understand this system, it is important to know that sometimes international transfers can go through correspondent banks (there can be from 1 to 3) when using SWIFT, and as a result, all single commissions add up to one. It is important to pay attention to the fine print, as it hides information about possible fees for processing payments – often such information is deliberately hidden and in this case, it is difficult to understand how much you will have to pay.
Bottom Line: Key Principles of Use
First of all, the difference lies in the system of work, since SWIFT is a telecommunications society, and BIC is a bank identifier. But their primary function is the same – to determine the address of the bank where the payment will be sent. Both codes are assigned to each financial institution to make international transactions possible.
Summing up, despite the completely different names, these two terms actually mean the same thing, but at the same time, they make people confused. But sometimes these two codes are used even in the same line as SWIFT/BIC and denote the same code.
SWIFT has been processing the registration of BIC codes since 1973 when it was created in Brussels and denoted an identification code back then. Any financial and non-financial institution can obtain these codes. It is important to distinguish difference between SWIFT and BIC codes for a business, they can change the name to BEI or, in decryption, the business object identifier. By using this type of code, businesses can make it easier to transfer payments between themselves. Moreover, in addition to sending money, banks can communicate with each other, which is always indicated in the statements.
When banks or other financial institutions start using SWIFT, they may rely on new software or other services that can be provided to them. Thanks to the SWIFT code, banks receive their identifiers, which will be clear and understandable for sending to banks and very user-friendly for ordinary individuals. Thanks to the code, the recipient bank has the following information about the sender: the name of the bank, the country where it is located, and where the head office is located.
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