There are a large number of banks in the world. Almost all institutions actively interact with each other. In order to conveniently conduct interbank transactions, including cross-border ones, a unique SWIFT system was developed. It allowed to unify the processes of money transfers and speed up the transfer of information. With the help of a single system, standard rules were introduced for all participants in the financial market.
Thanks to standardization, all SWIFT payments are processed as quickly as possible and with a minimum commission. They are executed between any foreign banks that support this standard. Now this system is used in 200 countries, it is represented in more than 10 thousand financial institutions.
With the help of the SWIFT system, money is transferred by companies, brokers, exchanges or individuals. To make payments, you need to know bank swift code. This is the bank identifier that all users of bank cards or accounts have.
The main advantages of SWIFT include:
- High speed of transfer – with the application of common standards, the speed of interbank communications has increased significantly. The money is credited to the recipient’s account within 5 minutes;
- Operations can be automated – the system provides automatic numbering, message passing and verification of recipient information;
- Banks are connected to the global system, which increases their competitiveness. Thanks to the inclusion in the international payment turnover, the bank expands its capabilities and attracts new customers;
- Provided multi-level protection of customer information from falsification, loss and various risks. These are physical access control, presented in computer centers, coding of communication lines, ensuring internal security;
- Quick resolution of disputes – all participants in the payment process are responsible, which is determined by general agreements;
- Using SWIFT is beneficial not only for users, but also for banks. They get the opportunity to streamline internal processes, eliminate manual processing, improve control and significantly speed up the placement of money in accounts. These opportunities are available after the reorganization of labor.
Users who have known about this system for a long time especially like the speed of transactions and the guarantee of security. The system has special security measures in place. They provide the highest degree of security compared to traditional methods. The system uses automatic numbering of both incoming and outgoing messages in the prescribed order. Messages are exchanged between two banks using an established private key relationship. Recipient information is checked automatically. Thus, security in the SWIFT system consists of a multi-level combination. These are the safety of the transmission line, operation, procedural and physical safety.
Disadvantages of SWIFT
Working in the system has some drawbacks. Small organizations may have certain difficulties, because they need to rebuild internal processes, adjust work to high requirements, and solve a number of technical issues. Small institutions will face burdensome costs.
Due to the fact that the processing time of transactions is significantly reduced, the bank must abandon the possibility of using a payment credit. Significant disadvantages include the fact that with the help of such a system they exert sanctions pressure on some countries. In order to transfer money, you need to provide a lot of documents.
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