SWIFT and the payments roadblock for SME exporters

Published by The Finextra


If you have transferred money to an overseas bank account lately, chances are it was processed by SWIFT.

The Society for Worldwide Interbank Financial Telecommunications’ FIN messaging standard has already facilitated an estimated 1.5bn such transactions so far this year, and carries the bulk of the $155tr per year being sent between countries.

Whilst, as a background technology, many consumers may never know they have used SWIFT, they may well recognise it for its shortcomings.

To start with, making payments through SWIFT requires linking banks up through a series of complex BIC codes. And FIN transactions are slow to conclude and can be error-strewn. This system makes it all too likely that customers can lose money just by wrongly inputting a single character.

From my discussions with many customers, it seems like about 5% of transactions are going missing. Banks will often investigate wayward payments, but cases are often resolved after only weeks.

The biggest problem, however, is that SWIFT depends on a third, intermediary bank to receive and pass on the funds. This means additional processing and wait times.

The issue is age. Founded in 1973, SWIFT is a 43-year-old anachronism, and it’s showing its age. SWIFT was formed for an era that virtually pre-dates the internet, and which certainly came before the mobile messaging apps that most of us now use…