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In today's world, businesses and individuals often receive payments from overseas clients or partners. While there are several methods for receiving foreign payments, one of the most popular and secure ways is through the SWIFT (Society for Worldwide Interbank Financial Telecommunication) transfer system.
However, many people in India are not familiar with the process of receiving foreign payments through SWIFT or wire transfers. Whether you are a freelancer, an entrepreneur, or a business owner, this blog will help you navigate the complexities of SWIFT transfers and receive your foreign payments with ease.
What exactly is a SWIFT Transfer?
SWIFT payments are transactions that let you send and receive electronic payments from one country to another through banks. Money can be transferred internationally quickly, precisely, and securely via the SWIFT payment system.
It doesn't matter if the seller uses a different bank than the person paying, SWIFT Transfer works for all.
So, it essentially serves as a courier between countries.
How does SWIFT payment work?
Multiple processes are involved in SWIFT payments, most of which are done behind the scenes by banks. The method for completing a SWIFT transfer is:
- Firstly, the sender will initiate a payment in foreign currency to you.
- Then, the payment will be received in the foreign currency in your Indian bank account.
- Finally, this foreign currency will get converted into INR and get reflected in your bank account.
- About 7-15 days after the foreign currency is received in your account, the FIRC will be issued.
Let’s say that Bank A and Bank B are in separate nations. Then a transfer has to be made from Bank A to Bank B. Now if both banks have an account with each other, then the amount will be moved directly between the two banks when Bank A sends a SWIFT message that is directed to Bank B in a separate nation.
However, not all SWIFT transfers are as simple as this since sometimes more than two SWIFT member banks are required to complete a transfer because it is not necessary that all banks have bank accounts with each other.
Here is where correspondent banks come in, i.e. Bank C. In the above case, Bank C acts as a middleman and connects Bank A and Bank B.
This may have an impact on a transfer's price and timeline.
SWIFT transfer fees
The bank you use will determine the SWIFT costs. The charge for utilising the SWIFT system is sometimes known as a transaction fee or a wire transfer fee. For outgoing transfers, each bank sets its own cost, which varies depending on the bank and the destination.
Depending on the bank’s transfer route, SWIFT or wire transfer costs might range from $10 to about $50.
When Indian banks convert the currency into INR, then they levy an additional charge. Each international wire transfer is subject to a fixed fee or commission. These typically cost between INR 750 and INR 1,000 per operation.
Additionally, banks charge a currency conversion markup of ~ 3% + GST while converting the foreign currency to INR.
Do I have to pay SWIFT fees?
The sender decides the payment structure for the SWIFT fees. It is majorly determined by the SWIFT codes. When configuring the transfer, the sender makes this selection. Here are the codes:
- OUR: The term "OUR" denotes that the sender is liable for any and all SWIFT-related banking fees, both now and in the future.
- BEN: All SWIFT banking fees are the responsibility of the beneficiary or the receiver. The amount received will be reduced by these fees.
- SHA: The recipient pays the receiving fees as well as any correspondent fees, and the sender covers the outgoing fees.
Time Taken by SWIFT Transfers
In most circumstances, a SWIFT transfer can take 2–5 working days. Depending on where the money is being sent from and received, the duration may vary. Additionally, your transfer may be cancelled if there are any errors in the transfer information (like an incorrect purpose code).
The individual rules of each bank may have an impact on transfer times. Know-your-customer (KYC) and anti-money laundering (AML) requirements vary by location. Simply put, some banks handle data at a slower rate or according to different standards.
Weekends and bank holidays, when many banks are closed, can also cause SWIFT transactions to be delayed.
How to Track SWIFT Payments?
In most cases, you may track your transfer using a SWIFT code or SWIFT number. The SWIFT number can be used by the receiver to check the progress of the transaction as well.
Once you have the SWIFT number, you may get in touch with your bank and request a wire trace.
If your payment is made through the SWIFT network, you must ask for an MT103 document to trace your international wire transfer.
What are SWIFT Codes?
SWIFT code is also sometimes referred to as a BIC number. Around the world, it is used to identify banks and financial organisations. It identifies them by name and location; it functions as an international ID or bank code.
Your nation, city, bank, and branch are all identified by the 8–11 characters in a SWIFT code. A SWIFT Code comprises of:
- A-Z bank codes: The bank is represented by 4 letters. Usually, it seems to be the name of that bank abbreviated.
- A-Z list of countries: 2 letters that identify the nation where the bank is located.
- Location 0-9 or A-Z code: 2 alphanumeric or numeric characters. It shows the location of the bank.
- Code of Branch 0-9: Three numbers that identify a certain branch. The bank's headquarters are represented by 'XXX'.
When sending money between banks, especially for international wire transfers, these codes are utilised. These codes are also used by banks to communicate with one another.
What is an MT103 document in SWIFT Transfer?
An MT103, a standardised proof of payment document, can be provided by any bank or other financial institution that transmits money over the SWIFT network.
The MT103 document contains all relevant information, including the transfer date, amount, sender, and recipient data.
If there is a dispute about the transfer you made or if the transaction has any problems, an MT103 document can act as proof of payment. Therefore, it is quite important.
An essential point to understand is that most banks won't provide the MT103 documentation to you themselves. However, they’ll provide it to you on a request.
Try Mulya Finance for your International Payments
SWIFT or Wire transfers can have very high transaction fees and also depending on the bank, there can be a high markup on the exchange rate. Whereas, Mulya charges 1% flat fees and no markups on currency conversion rates. Moreover, there are no hidden charges as well.
In general, Swift payments can take up to up to 15 days to send the FIRC. However, with Mulya you can get the FIRC within 24 hours.
So, if you are looking to receive international payments, Mulya Finance is the right choice for you. Not only does it maintains transparency in terms of fees but also offers 24*7 customer support.
Additionally, Mulya utilises the real mid-market exchange rate, which excludes any additional markup charges. Therefore, with Mulya's services, any company or individual, no matter how big or little, can easily accept cross-border payments overseas. To learn more about how to use Mulya, click here to know more about how to get started on Mulya.
Written by
Samarth Srivastava has spent few years honing their skills and knowledge in the field of international payments. With a deep passion for finance and a keen eye for global business trends, the author has become a trusted authority on all things related to international payments.
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