Understanding International Money Transfers: SWIFT, Wire Transfers, and EFT

When it comes to moving money across borders, understanding the terminology and
processes is essential. International money transfers, commonly known as SWIFT transfers,
are often confused with domestic transfer methods like wire transfers and Electronic Funds
Transfers (EFT). However, it’s important to distinguish between these terms and understand
their specific uses.
Wire transfers and EFTs are terms reserved for money transfers within a country’s borders.
Wire transfers refer to the movement of funds between accounts within the same bank, while
EFTs are used for transfers between different banks. On the other hand, international money
transfers involve a more complex process compared to domestic transactions.
When transferring money abroad, banks act as intermediaries, forwarding the transfer order
received from their customers to another intermediary bank that facilitates the transfer
overseas. The process involves sending the transfer first to the intermediary bank of the
recipient’s bank, and then to the recipient’s bank and finally to the individual recipient. This
entire correspondence during the transfer is conducted via the SWIFT network, and the costs
arising from this communication are typically shared between the sender and the recipient.
In international money transfers, alongside the sender and recipient information, SWIFT/BIC
codes and IBANs are also used. Banks utilize these codes to process transactions efficiently.
BIC numbers vary depending on the official name and location of the banks. Additionally,
when transferring money internationally using an IBAN in European countries, the SWIFT
code is also employed. Understanding these codes and processes is crucial for anyone looking
to carry out international money transfers successfully.