Many entrepreneurs who want to start a business abroad, in particular, to open a banking institution, seek to connect to the SWIFT system which will provide their customers with more favorable conditions for making various international payments.
In this article we will consider the main features and advantages of the SWIFT system.
The SWIFT system was founded 45 years ago (in 1973) by decision of more than 247 banks from 19 countries.
According to the legal form, this system is a Cooperative Society (CS), registered in Belgium and owned by more than 9,000 banks from 210 countries. The head office of the company is located in the capital of Belgium.
Today, among the participants of SWIFT there are more than 11,000 various financial institutions and organizations from 202 countries, including more than 1,000 large world-famous corporations, including:
- Banking institutions and depository banks;
- Stock exchanges;
- Insurance companies;
- Pension funds;
- Investment managers;
- Transfer agents;
- User groups;
- Internet providers, etc.
Every day, millions of transactions containing information about securities, payments made between banks, as well as money transfers are carried out through this system.
Those who are planning to set up a bank and to register a SWIFT card should thoroughly understand its scheme of work.
Only 2 types of messages are exchanged in SWIFT system:
- From client to system (system);
- From client to client (financial).
Each of these messages includes a title, body text, and a trailer.
The message sent by the user through the computer terminal enters the main computer and is stored in the processor. On the next step it is sent for processing, which consists in the following:
- Check of syntax errors;
- Converting a message to a sending form;
- The addition of trailers;
- Creation of new titles;
- Copying, as well as encryption of the message for the purpose of storage.
Those who would like to register a SWIFT cell should know that in the case of a positive test result, the client receives an instant notification with the ACK, and in the case of a negative result, with the NAK.
If you are intended to set up a financial institution or to buy an existing bank, then connecting to the SWIFT system will allow you to:
- Send payments of any amount to the account of any banking organization;
- Send and receive payments promptly (from 2 to 15 minutes);
- Take advantage of low tariffs;
- Choose the currency for sending the payment (USD, EUR, GBP, etc.);
- Choose almost any country for making payments;
- Pay a strictly fixed amount of commission (progressive commission);
- Be confident in timely payment execution (in case of violation of the deadlines though the fault of SWIFT, the system is obliged to pay compensation);
- Use the system services with a high level of protection and information security.
If you are intended to set up a financial institution or to buy an existing payment system, then by connecting this system of interbank financial communication channels, you will receive a unique SWIFT code, which will be partially used for the formation and subsequent registration of your clients' IBAN codes.
IBAN codes are international bank account numbers that can significantly reduce the cost of interbank transactions.
- The code length is not more than 34 characters, written in groups of 4 characters;
- The first 2 characters represent the code of the country where the beneficiary's bank is located;
- The 3 and 4 characters indicate the control unique number of the IBAN code, calculated according to the standard;
- Characters from 5 through 34 are the basic bank account number (BBAN);
- The length of the BBAN is no more than 30 characters (depending on the selected country), including the client's account number, as well as the beneficiary's bank code (bank branch).
Today, payments through the IBAN code are used in more than 65 countries around the world.
No less popular among those who want to register a bank or to buy a payment system remotely, is the use of the SEPA international payment system.
- SWIFT system allows payments all over the world, while SEPA – only in Europe (34 countries + countries not included in the EU and the Eurozone);
- Registering a SWIFT cell will allow multi-currency payments, while SEPA payments can only be made in EUR;
- In SWIFT system, there are no restrictions on the amount of transactions. In SEPA, the maximum payment amount is 50 000 EUR.
If you decide to register a banking institution or a payment system, then YB Case lawyers will be ready to provide you with a full package of consulting and support services, including:
- business analysis of the jurisdiction of your choice;
- preparation of registration documents;
- obtaining a banking license;
- registration in a SWIFT system and much more.
For more information, please refer to our specialists using the contacts listed on the site.