Swift Brokers 2022 - Which Brokers Accept Swift?
Swift (The Society for Worldwide Interbank Financial Telecommunications in full form) enables international payments to be made between financial institutions using a unique and secure messaging system. Importantly, a number of online brokers offer Swift deposits and withdrawals to their customers. Here we explore how the global payments system works, as well as looking at its speed, security and benefits for traders. We also list the top Swift brokers in 2022.
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Swift Payments Explained
Founded in the 1970s, Swift works by assigning each financial institution, country and location a specific numerical code. This coding system is also applied to the payment details, known as ‘fields’. This series of numbers and letters are formed into a message which can be sent across the world. As a result, Swift is by definition a messaging system. The organization does not hold funds or manage accounts.
Pros Of Trading With Swift
Swift is the dominant financial messaging service today. Each year, payment volumes can exceed five billion. And almost all standard banks in the UK use Swift payments including HSBC, NatWest, and Nationwide, as well as fintech companies like Revolut.
Some instant payments API gateways also use Swift messaging to enable transactions. In addition, several leading trading brokers facilitate deposits and withdrawals via the secure processing service, including AvaTrade, Plus500 and FBS.
The messaging system was created for making overseas transactions. It uses a variety of payment formats, meaning that regardless of the language used by the banks and brokers involved, each transaction is universally interpreted. A bank in the UAE could feasibly send a payment via Swift messages to a broker in Canada or the US without a language barrier.
The message file format and fields are identical across the globe. For example, a payment 103 is just one of the different message types available, and in this case means ‘a customer payment or cheque wire transfer to an institution or company’ (as opposed to a bank).
So, whether you’re looking to send money to online brokers in Europe, New Zealand, South Africa or anywhere else, payments made using Swift will be easily translated. It’s perhaps unsurprising then that the organization’s logo is the famous lineal globe.
The detail of a message includes where it has come from as well as where it is headed. Therefore, each payment has full traceability. This provides additional transparency and security for traders making deposits and withdrawals to offshore brokerages, for example.
Swift has ensured this transparency is also passed on to consumers using Swift GPI payments tracking. Digital GPI tracking enables banks to view a payment’s status. Banks are even required to confirm to the sender when the funds have reached the end destination. As a result, traders have peace of mind when making deposits and withdrawals.
Cons Of Trading With Swift
Those who have already made broker deposits and withdrawals with Swift will know that it can be expensive. There are often fees placed on both the sender and receiver. Banks and brokers may also provide poor exchange rates if switching between two currencies. As a result, alternatives to Swift payments can sometimes be cheaper, for example, PayPal.
To perform a deposit into a trading account using Swift, you must hold a bank account. And recent estimates suggest a quarter of the world’s population may not own a bank account because they fail Know Your Customer (KYC) checks. This means that it’s not the most widely accessible payment option for aspiring traders and investors.
One non-Swift payment system that has held the limelight recently is blockchain technology. The level of identity controls required to use such solutions are typically much lower. Customers just need an e-wallet and a cryptocurrency of their choice, such as Bitcoin, with limited passport or address checks. Of course, these alternatives do come with their own disadvantages.
Unlike a bank transfer, you cannot conduct a chargeback on a Swift payment. Once the message has reached the receiver, it cannot be reversed. So once you’ve requested a deposit or withdrawal, your broker may not be able to return the funds. This is potentially a significant drawback for high volume traders.
Payment timescales vary. In the past, it’s been a fairly slow process, sometimes within a time frame of up to seven days as the payment bounces between financial institutions until it completes its path to the receiving account. Also, Swift payments are not completed over weekends. You can send a wire transfer on the weekend, but the payment will not be processed by the receiver until the next working day.
Looking to the future, Swift is enabling payments to be executed in seconds through their GPI system. This allows for completing payments on the same day as the request was made (permitting for time differences around the world). But even with these changes, processing a payment may still take 1-4 working days as not all banks use the Swift GPI.
The payment company also has an ambition to enable instant payments. Australia saw the introduction of Swift’s New Payments Platform which aims to speed up and provide status confirmation throughout the transaction. But until clearing and settlement can be executed in seconds across all institutions, the system’s competitors will be lapping at its heels.
Swift is well known as a secure way to transfer funds.
There are two main reasons that a Swift payment may not complete and each has a resolution:
- If the message is coded incorrectly – There is a strict set of reject/return guidelines if this happens, so your funds shouldn’t go missing into the abyss.
- The message is lost as it bounces between banks – Swift-enabled banks are responsible for tracing wire transfers if they go missing in the network.
Plus, with the GPI tracking mechanism, customers can track transfers end-to-end without relying on bank reporting.
But, whilst the transaction itself is secure, wire transfers are not protected against fraudulent brokers. A payment cannot be recalled once the message has reached the recipient. You cannot conduct a chargeback like with a bank transfer/vendor payment.
In addition, the system has come under fire in the past as a series of hacks compromised the network’s integrity. Following the cyber-attacks, Swift has taken action and created the new Payments Control Service which allows banks to screen their messages for any peculiarities and pause or resume messages prior to transaction.
Deposits & Withdrawals
Deposits via wire transfer will most often come via Swift payment. The process flow for a Swift payment is slightly different to that of an online retailer. Rather than access through a payment gateway on the broker’s site, you will complete the transfer via your bank.
The brokerage will usually provide you with their Swift codes (also known as BIC) and IBAN (International Bank Account Number) to enable this.
Withdrawing via wire transfer is essentially the reverse. You will need to request that the broker submits a wire transfer, which depending on the service level of the brokerage could take a couple of days. Some brokers will promise you a timescale, for example, withdrawal requests might be processed within 48 hours.
When receiving payments, the banking reference should show the broker’s BIC and IBAN numbers.
Fees & Costs
Payments via Swift often incur charges on both the sender and receiver. Most brokers cover the fees on their end if you choose to deposit this way. Others should include details of the fees on their payment options page. It does mean, however, that low-value payments may not be suitable.
If you’re withdrawing via wire transfer you may also see a charge. Trustworthy brokers are transparent about these fees before you open a trading account.
Note if your payment involves two currencies (e.g. USD/CNY), you may also experience poor exchange rates between the banks.
Is Swift A Good Choice For Traders?
Understanding the pros and cons of Swift payments will help you to choose a trading deposit method that suits your needs.
Payments via Swift wire transfer are an easy and secure way to deposit funds to brokerages worldwide. You can conduct the transfer directly from your bank account and will not need to open an account with a third party (e.g. Western Union) or purchase a cryptocurrency to enable the transaction.
The service can sometimes be expensive due to the charges and poor exchange rates enforced by banks and brokers. Plus, transactions will only be processed during bank opening hours, which can make the timescale lengthy. In addition, the costs also make it an unpopular option for low-value transfers and deposits.
In the past, wire transfers have been almost the only way to move funds safely between international bank accounts. But, as new technologies like blockchain come into force, it pushes innovation and we are likely to see wire transfers become faster and more transparent.
See our list of brokers that accept Swift deposits to start trading today.
Is Swift Message Suitable For Domestic Payments?
No, Swift payments (AKA wire transfers) are designed for international transactions. Domestic payments are typically made via bank transfer and will not incur the same fees.
How Much Do Swift Payments Cost?
Fees for Swift payments vary between banks and brokers, but there will often be charges on both the sending and receiving ends. These are usually around 6-10 GBP per transaction. You may also experience poor currency conversion rates (usually 3-5%) if you’re switching between two currencies.
How Long Do Swift Payments Take?
As most banks still don’t use Swift GUI, payments usually take 1-4 days to process. The majority of transactions will only be completed on working days and therefore if a wire transfer is sent over the weekend it won’t arrive until Monday.
Can Swift Payments Be Reversed?
No, Swift payments cannot be reserved once the message has reached the receiver. This is unlike a bank transfer where you can conduct a chargeback on the payment.
Are Swift Payments Completed The Same Day?
No, usually Swift payments take 1-4 working days. Brokers also have their own processing times to take into account. See our reviews of top brands or head to the respective brokerage’s website for more details on payment options.