swift – A Comprehensive Definition of swift – Society for Worldwide Interbank Financial Telecommunication


A Comprehensive Definition of swift

Society for Worldwide Interbank Financial Telecommunication

Getting Familiar with an International Bank language


International electronic transfer systems are as significant as, and sometimes more important than the local systems. The most advanced countries are increasingly and quickly adopting electronic fund transfer methods and forsaking the old methods. If a country is going to do transaction with these advanced countries it should be equipped with new systems of e-transfer of fund.

International transactions and payments nowadays are being done at least in two ways: international credit/debit cards; and SWIFT.

Definition of SWIFT

Swift is an international financial network which provides particular facilities and services through its more than 10000 financial institutions and computer centers in different countries. This multi-users system and its institutions are governed like a cooperative society and the member banks hold share and benefit from its profit.

Another definition says: SWIFT is a network which is currently communicating the financial messages between members and other users of 163 countries. Payments can be done through institutions which use SWIFT.

The SWIFT message can be used to confirm the details of a contract between two parties. It also can be used for foreign exchange.

Nowadays, the SWIFT network which may even act in the role of deposit in local banks is a secure and reliable way for purchase order and sale.

The primary purpose of SWIFT was to substitute old and non-standard system of telex and paperwork with a new standard model.

History of SWIFT

Before the emergence of SWIFT, cross-border payments were neither secure nor reliable and standard; as a result the need for a new international financial system with which the transactions could be secure, reliable and standard was strongly felt. So the representatives of 239 banks from 15 countries got together in Brussel, Belgium to find a comprehensive solution. Many studies were done by these banks the purpose of which were facilitating communication all over the world and creating a common standard language for international financial transactions. With representatives from 17 countries and 50 customers, the SWIFT was established in 1974. Security and credit rules and regulations of SWIFT were put forth in 1975.

178 countries and 600 banks and financial institutions are currently member of SWIFT network. The headquarter of it is located in Belgium. There are some Customer Support Centers in United States, Netherland, Hong Kong, and Britain.

Significance and Advantages of SWIFT

Today we cannot imagine a world without SWIFT. In absence of SWIFT most of the international transactions would be almost impossible. Here we are going to examine main advantages of SWIFT network; almost all of them are product of Information Technology.

  • Standard Format

Before the emergence of SWIFT, financial messages were transferred through telex and the sender usually created the message based on his/her own understanding of the subject. But the clear and user-friendly syntax of SWIFT language has made it easy for receiver to understand a message.


  • Speed

All the messages are transferred through network and receiver will receive it within a matter of few seconds.


  • Reliability

All kinds of coding and decoding of the messages are done by network system with no human interference. That’s why the users trust it.


  • Being Inclusive

Now in 2019 SWIFT has spanned its services to more than 200 countries and more than 11000 financial institutions are connected to its network.


  • Low Cost

The SWIFT message and transfer services have reduced the cost of any international financial transaction and cross-border payment to less than one third of the cost of old telex system. This process has been continued and for instance the financial messaging cost has reduced by 50% between 2010 and 2015.


  • Security

The customers use SWIFT network system to transfer huge amount of money, so the security of this network is of high significance. Using its own private network and highly advanced hardware and software systems, SWIFT has been able to cover all the security considerations of its customers and users.





Services and Users of SWIFT


Here we give brief explanations about the different services provided by SWIFT all over the world. Then we present a list of SWIFT users who use its services the most. The bank services provided by SWIFT are as follows:

  • Bank Draft
  • Debtor and Creditor Bank Drafts
  • Bank Bill
  • Deals and Foreign Exchange
  • Drafts
  • Letters of Credit (LCs)
  • Stock trading between Banks
  • Account balance Report
  • Settling Small and Big Amounts

Users are also important part in SWIFT.  We can classify the users of SWIFT into 3 categories:

  • Shareholder members, including Banks, qualified Brokers and dealers.
  • Sub-Members including: organizations which are qualified for membership in SWIFT and more than 50% of their shares directly or 100% of their shares indirectly is under the control of a SWIFT member.
  • Partners including:
  • Brokers and agents who are active in stocks exchange
  • Dealers of currencies for stocks, Bonds and related financial derivatives.
  • Financial Institutions for investment
  • Dealers in financial markets
  • Institutions of Custody Services
  • Commercial institutions
  • Institutions of investment management; etc…
How SWIFT Works?


SWIFT is a secure and reliable network for its members. According to rules and regulations of SWIFT, a member of SWIFT should be either a bank or a financial institution which has bought shares from SWIFT. Any applicant will first fill an application form. After acceptance of membership, some parts of special equipment will be provided by SWIFT and other accessories will be provided by applicant. Usually any country whose messages have reached a particular limit which could be economically justifiable can create a base for accessing SWIFT or SAP whose cost will be paid by SWIFT.

One of the highly important matters in SWIFT is communication lines. The lines for connecting to SWIFT network are generally categorized into 3 groups:

  • The main lines for connecting CBTs to SWIFT network.
  • PSTN or Dialup telecommunication lines.
  • Leased lines.

From a security point of view, having access to SWIFT information in financial institutions is classified, i.e. the users will access to information of SWIFT network according to their needs and status. Coding the information will be done by network itself which will be in the form of information packages (Protocol X. 25) and the user members have no role to play in it. The procedure is such that one operator controls the financial message and the other operator will confirm and send it.

The software which was previously used for SWIFT was ST400 which was working under VMS, but the currently used software is SWIFT Alliance which works under Windows NT or Windows 2000. Any mistake or damage in equipment will cause the network support center (the support center of Iran’s SWIFT is located in Netherlands) to initiate safety and precaution signals. Generally, after the financial message has been sent, if the balance of account is sufficient the information will be received and the confirmation message will be sent, then the account will become debtor, but if the balance is not sufficient the message will not be confirmed and a deficiency message will be sent.

Let us explain the mechanism of SWIFT in brief:

Assume a seller and buyer which are using IDENTRUS issued by their banks are going to do a deal through internet. So the following steps will be done.

  • The buyer will issue a purchase order through internet.
  • The seller has to confirm and verify the identity, certificate and application of the buyer. The buyer sends purchase order through Trust Act.
  • Trust Act will inquire from the respective bank for the correctness of the customer’s identity. Trust Act will simultaneously inquire for the verification of both banks’ identity through IDENTRUS.
  • Once the verification done, trust Act will transfer the verified and confirmed purchase order to seller. As a result the seller can now trust the received purchase order.
  • Seller will give a receipt to buyer. So the buyer has now a trustable and guaranteed receipt.
  • Trust Act will save a time record of all messages.
  • After this step, all the communicated messages will be exchanged and recorded.


SWIFT Messages

Based on their functions, the SWIFT Messages will be categorized to different formats. According to specified standard in this system, a specific code is given to each message. There are currently around 250 code titles which will be classified into 9 groups. These codes are in the format of number and they are usually called MT. the first figure of this code numbers corresponds its group. For example the message 103 and 192 belong to group 1, and message 700 and 740 belong to group 7. These code numbers are defined contractually and each code refers to one kind of SWIFT Message, which is used according to its globally specified definition.

Classification of SWIFT Messages is as follows:

Group1- Real customer payments and cheques’ receipt

Group2- Interbank payments or more generally, money transfer between financial institutions

Group3- Treasury markets, foreign exchange, financial markets and their respective derivatives

Group4- Payments related to collection of cheques or bill of exchange

Group5- Securities Markets

Group6- Precious Metal markets

Group7- LCs and Guarantees of foreign exchange

Group8- Traveler’s cheque

Group9- Cash payments’ management

As you can see above, groups 7 and 4 are particularly about commercial activities; nevertheless the group 1 can also be used in more simple payments like open account and prepayment method.

There are 29 kinds of messages within group 7 and most of these messages are about LCs’ procedures. The most important, most detailed and mostly used SWIFT Message in this group is message 700 which is meant for issuing and advising the LCs. This message is provided by issuing bank (the bank issuing LC and responsible for the payment) and is sent to advisor bank in order the message to be advised to seller. Some of the most important SWIFT Messages are as follows:

  • Message for issuing a LC, MT700
  • Message for amendment to a documentary credit, MT707
  • Message for transfer of LC, MT720
  • Message for acknowledging the receipt of LC’s message, MT730
  • Message for advice of discharge, or settlement MT732
  • Message for discrepancy
  • And…

Due to high importance of opening a LC for buyers and more particularly for sellers, we will explain all the content of a SWIFT Message for opening LC, MT700. All the SWIFT Messages have several parts which are called field. These fields have been designed based on a standard format and have the same application and meaning in the all banks of the world. All the fields have been specified with some digits and letters. It should be notified here that there is no need to memorize all the fields, but all the parties of LC (buyers, sellers and their respective banks) should be informed that when referring to a particular field, they are actually denoting the same part of the same message. The SWIFT Message for opening a LC has got 38 fields from which 10 are grouped in mandatory fields and the remaining 28 fields are optional and if necessary, should be filled according to purchase order, type of credit etc. the mandatory fields are as follows:

  • Sequence of Total
  • Form of Documentary Credit
  • Documentary Credit Number
  • Applicable Rules
  • Date and Place of Expiry
  • Applicant
  • Beneficiary
  • Currency code, Amount
  • Available with… by…
  • Confirmation Instructions

It should be mentioned here that fields of LCs are in English language and will be filled based on predefined standards. In filling these fields, the issuing banks should according to contents of pro forma invoice and Order Registration, give priority to LC’s issuing application forms which have already been completed by buyer.

What is swift MT799 (swift messaging types)?

Swift MT799

What is swift MT799 (swift messaging types)?

While doing a trade through bank warranties and LC you might have heard about this type of messaging format.

MT799 is a message format type in swift network system which allows the banks to communicate between each other freely and securely.

It is worth mentioning that MT799 is not a mechanism for transferring funds, paying or a commitment for doing a service, it is rather a kind of confirmation of funds or proof of deposit.

As the MT799 is a free of charge message format, the banks can freely and easily send different kinds of messages before transferring warrantied amount or sending LC’s.

swift MT799

swift MT799

Different kinds of MT799

MT799 is used by banks for the following occasions:

  • Proof of Funds (POF)
  • Ready willing and able letters (RWA)
  • Pre consulting letters

How to use MT799

A bank which is qualified to issue MT799 is allowed to issue electronic confirmation letters in order to confirm the proof of funds and these letters should be conformed to 7th category of swift messages’ rules which are meant for treasury and trade union markets.

Traders mostly believe that to show a proof of fund they need to send a MT760 SWIFT, but in fact what they need is just a MT799.

Most of the time, MT799 is issued before signing a contract or before issuing a LC or bank warranty.

When MT799 is received by the seller’s bank, the seller also sends a confirmation letter for the proof of product (POP) to show that it can performs its duties based on the contract.

How to send the message

Only a bank connected to swift network is able to issue a MT799 message. You can act either through your bank or your financial agent which uses other banks for its services.

If you don’t have collateral, you can use financial agents’ services, as they can give you MT799 without collateral.

What information is needed to send the message?

The following are most of the information which is needed to send a swift MT799:

  • Name and other information of the sender
  • The value of document
  • Bank’s recommendation letter
  • Name and contact information of beneficiary
  • Validity of document
  • Copy of invoice/pro forma invoice of the contract
  • Number of credit
  • Value of LC
  • Draft of LC
  • The last date of transportation



SPP Transmission Method or Sequenced Packet Protocol:

SPP is a Xerox Network Systems (XNS) protocol for sequenced and connectionless packet delivery support. It is a network transport protocol providing reliable packet delivery with flow control.

SPP is similar to Transmission Control Protocol (TCP)

A key technical difference is that SPP packets count sequence numbers but not bytes.

SPP manages several functions. It uses destination identification (ID) numbers for transport link target end definition.

It also uses sequence numbers for transmitted and sequenced packet maintenance. SPP acknowledges allocated numbers for previous packets, which ensure destination reception alongside indicating successful transmission completion.



FX4 Cash strongly integrates with Deutsche Bank’s existing client access channels, extensive reach to global payment and clearing systems, as well as leading FX trading infrastructure to provide you with a one stop solution for your cross-border currency and worldwide payments.

FX4 Cash is a platform that provides an automated solution for handling global cross- currency payments, whether large or small, recurrent or infrequent.



FAST (Fast And Secure Transfers) is a new electronic funds transfer service that enables customers of the participating banks to transfer funds from one bank to another in another country or continent almost instantly. You no longer need to wait up to three working days for funds to be transferred between participating banks.

FX4 is a currency change method that is used to prevent money laundering in each continent.

In the FX4 currency transfer method, if the origin and destination are on a continent, the return location should be changed by another currency unit. But if the origin and destination of the two different continents, in this way, there is no need to change the currency.

KTT- NetSwift


This procedure is in the form of “Cash and Credit” server in which a manual download method is used, and the bank must be able to execute its instructions.

Moreover, the bank must be equipped with one of the following two systems.

In Key Tested Telex (KTT), the work starts when the sending Bank and the receiving Bank send a Telex message, and the receiving Bank must turn on its telex. When they are communicating via telex,

a secret telex code is created for making a secure domain between two officers, and the action of transferring currency between two banks is done with it. Unfortunately, very few banks have the ability

to receive KTT which is normally in countries like Russia (Zaman Bank of Azerbaijan) Litovany’s Barclays, Turkey’s Bank of agriculture, Australia, etc.


What Is The SwiftWire?


the Swift  international payment network is one of the largest financial messaging systems in the world. Transfer Wire can send or receive certain currencies via SWIFT payment.

Generally, if you’re sending money through your bank, then payment for a wire transfer is simply deducted automatically from the account from which the transfer funds are withdrawn.

SWIFT transfer methods:

1- Bank transfer SWIFT WIRE

2- Transfer SWIFT WIRE server


  • It is in the form of an international agreement, and the receiving bank must definitely send the final confirmation to the sender and the sending bank.
  • In the Server SWIFT wire, the following procedure should be done. Manual downloading is possible by two systems which are “Manual Mir & Mor system” and “Manual aliens 1&2 system”. All codes are entered into the TRN bank by sending MT103 and MT202, and the officer must enter all codes manually and transfer the money from the bank’s common account to the receiver’s account.

History of SWIFT – Advantages and importance of SWIFT

The definition of SWIFT:

SWIFT is an international interbank financial network which offers special and services through computer centers around the world.

SWIFT is a network that currently transfers financial messages between members and other users in 607 countries. Individuals can do their payments by institutions that use SWIFT. Sending SWIFT messages can confirm the details of the contracts between two users or convert foreign currencies.

The primary objectives of the creation of SWIFT was replacing non-standard paper communication methods or the transmission of messages by Telex internationally with a universal standard method. From the beginning of SWIFT’s establishment, it has undergone a major shift in its methods and mechanisms.

Advantages and importance of SWIFT:
  1. It is standard.
  2. Speed
  3. Trust
  4. Widespread
  5. Low cost
  6. Security

History of SWIFT:

Albert Prince of Belgium sent the first message via SWIFT with 6033 words. Its headquarters are in Belgium. Meanwhile, countries in the US, the Netherlands, Hong Kong and the UK operate as customer service centers. SWIFT has a SAP in all countries which is controlled by the SWIFT center.

It should be noted that the cost of using SWIFT is counted based on 118 Euro.


What is The IPIP-StoS-IPID Mony Transferway


The transfer of all huge financial resources of the world is done by servers in virtual banking. E-Banking, in which the server is connected to the common account of the bank, is used in server method.

The currency transfer method is done by servers that the money from the common account of the Bank is entered into the receiver’s common account, and it is uploaded or downloaded by the sender or receiver’s officer.

In the IP/IP method, the entry of the currency into the receiver’s server is uploaded. In the IP/ID method, the entry of the currency into the receiver’s server is downloadable. In the StoS method, the currency exchange is run in the form of a launcher with Windows time which was sent by the receiver’s officer who has a full control on his server. This method is less secure because it may not be possible to place the box or capsule on the server line when it is launched.

When the transfer of currency has a very high volume, in other words, it is considered to be the backbone of the currency exchange, due to the fact that the receivers cannot upload or download the money of the Fund, this action is carried out by the Fund’s officer, who is the Head officer of the server in the world’s prime banks, and the server line of the receiver must be open. There must be no obstacle on the path of the server’s money transfer, so numeric characters can easily be replaced and sent to receiver’s server as good as possible.

The differences:

  • In the IP/IP method, all the necessary facilities are sent to the receiving Bank for conversion of the box or capsule into the currency.
  • In the IP/ID document method, the money is provided by the receiving Bank, and only the perfect money and numeric characters are sent by the sender.


  • Sometimes currency exchange procedures can be carried out by DTC (Digital Transfer Central). In other words, it is transferring currency to the central bank’s common account.
  • Sometimes the method of transferring money is Legion-to-Legion, Officer-to-Officer or Bank-to-Bank. In these ways, the sender and the receiver have no role in arranging the contracts and essential guarantees, and only the officers of two banks communicate with each other. Furthermore, all stages of the currency transfer are carried out from A to Z.



All banks (or companies) must have the following features to receive currency:

  1. The server connected to the common bank account.
  2. The server’s Head Officer or an officer who is familiar with downloading or uploading server’s currency.
  3. License and authorization of the money tasers inside the server band.
  4. The amount of the accepted input currency.