Routing numbers and SWIFT codes are different but serve similar purposes.
In today's world, moving money from one financial institution to another can be completed quickly and efficiently without even leaving the comfort of your home. However, since the plethora of banks throughout the world contains many with dangerously similar names, a uniform system of identification was developed. When individuals and organizations send money, it is imperative that the intended destination be unmistakably identified, hence the use of codes and other specialized identifying numbers.
What is a Routing Number?
A routing number is a nine-digit numerical code used to identify a particular bank within the U.S. This number appears on the bottom of checks issued by that institution. The segments of the routing number can be used to identify Federal Reserve Banks and branch locations and act as a security component to verifying the legitimacy of paper checks and other negotiable instruments.
What is the Purpose of the Routing Number?
Routing numbers allow banks to properly identify other institutions whose account holders have written checks that ultimately were deposited at their own branch. This allows for accurate invoicing and the initiation of fund transfers. Additionally, routing numbers are used by the Automated Clearing House to facilitate direct deposit of payroll checks and the payment of bills when account holders utilize online services.
What is a SWIFT Code?
A SWIFT code is extremely similar in nature and purpose to a routing number, except its use is limited to international funds transfers. SWIFT codes consist of letters and numbers, the segments of which identify the bank name, country of origin and branch location.
What is the Purpose of the SWIFT Code?
SWIFT codes allow financial institutions to unmistakably identify one another when involved in international communications and fund transfers. Bank customers who wish to send money via international wire transfers must first obtain the SWIFT code of the foreign bank. The use of these codes prevents errors that could otherwise stem from institutions with extremely similar names.
