Difference between Swift and wire transfer?

This is a common question among traders about swift and wire transfer. 

• What is the meaning of wire transfer, How does swift work? 
• Whether swift and wire transfer are same?

Before differentiating Swift and wire transfer let us find out 

• What is swift and what is wire transfer? 
• What is Swift ? How SWIFT works?

Society for Worldwide Interbank Financial Telecommunication is abbreviated as SWIFT. 

SWIFT extends service of network which enables banks and other financial organizations all over world to send and receive financial transaction information in a standardized, secured and reliable environment. SWIFT does not facilitate funds transfer; but SWIFT sends payment orders, which must be settled by correspondent accounts that the institutions have with each other. SWIFT CODES means bank identification codes allotted to each bank all over world. SWIFT has been introduced after popular TELEX system service which had been used before 1990s.

The service of Telex is too slow and had no standardized format for the data it transfers, added up to an inefficient system apart from its insecurity. In order to solve the demerits of Telex services seven major international banks gathered together to discuss a suitable replacement of telex in the year 1974. After three years, in 1977, a society was formed and 230 member banks from 5 countries started operation of SWIFT. 

SWIFT has now more than 10000 members worldwide (more than 200 countries) handles more than 15 million messages daily. Any financial institution who holds a banking license can become a member of SWIFT by paying a joining fee and service charge for each message sent.

• What is wire transfer? 
• How wire transfer works?

Wire transfer is method of fund transfer by means of electronic from one individual or organization to another, either from one bank account to another or transfer of cash at a cash office. ‘ Western union money transfer’ is a good example for transfer of cash electronically who operates worldwide. In US, Fedwire system is more likely to be RTGS (Real Time Gross Settlement). 

Wire transfer services are in different categories like retail money transfer, International money transfer, international debit card etc.

In a retail money transfer (for example: western union), an individual or firm can transfer or receive money without having account with them.

International money transfers are effected with the help of SWIFT (Society for Worldwide Interbank Financial Telecommunication) messages. A six digit Bank Identification Code (BIC) is assigned to each bank and transfer of fund is effected with the help of SWIFT messages.