Companies have SWIFT and IBAN payment systems and codes to carry out commercial transactions at a national and international level. Next, we will learn about the main differences between these two codes or systems.
Acronym
One of the first differences between SWIFT transfers and IBAN transfers is the meaning of their acronyms. In the case of SWIFT transfers, the acronym corresponds to ” Society for Worldwide Interbank Financial Telecommunications,” which is a code used to identify specific banks or branches during transactions. For its part, the acronym for IBAN transfers means “International Bank Account Number,” which is a system that allows each bank account to be identified individually.
Aim
In the case of SWIFT transactions, this code does not transfer money directly but rather sends payment instructions between financial institutions. For its part, in IBAN transactions, its objective is to facilitate the identification of individual bank accounts in international transactions.
Operation
SWIFT is a messaging system that connects banks, while IBAN is an identifier for international bank accounts. Both are necessary to make international transfers, but they fulfill different roles.
Scope
SWIFT is used globally by banks and financial institutions in more than 200 countries. On the other hand, the IBAN is used in Europe and other countries within the SEPA area ( Single European Payments Area ), in addition to some countries that have adopted this standard.
SWIFT is a global system used in international transactions in almost any country. SWIFT operates as a kind of “global cooperative” that provides a platform (with a high level of security) for institutions to exchange financial information, including payment instructions.
On the other hand, the IBAN is mandatory in all member countries of the European Union (EU) and European Free Trade Association (EFTA) countries, such as Norway, Iceland, Liechtenstein, and Switzerland.
Identification structure
The identification structure of a SWIFT transaction consists of a code composed of 8 to 11 alphanumeric characters, which facilitates communication between banks in international transactions, including fund transfers, transaction confirmations, and other financial messages.
For its part, the structure of an IBAN transfer consists of a code made up of approx. 34 alphanumeric characters, which facilitates the automatic processing of cross-border payments, reducing errors and accelerating international transfers.
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