When you make a SWIFT payment, you are using a highly-specialized and secure messaging service to an institution, either in the US or overseas. It is an acronym for Society for Worldwide Interbank Financial Telecommunications. The processors of the information sent are located in Belgium where they store the messages, generate reports and bill the members for the service.
Significance
Before SWIFT was created, banks around the globe used Telex to communicate. It was deemed both too slow and insecure, and there was no standardization in the format the banks used. In many ways, SWIFT revolutionized the international banking community. This led to improvements in commerce between countries.
History
In 1974, seven international banks met to find a way to replace Telex as the prime communications vehicle among them. They formed a society called SWIFT three years later after recruiting over 200 banks in five countries. They went live with the SWIFT system. SWIFT is now a consortium of most major institutions located in over 200 countries. Its headquarters in Belgium has 19 offices worldwide.
Size
SWIFT has adapted to the changes that have taken place in banks throughout the world which has resulted in significant growth in both the number and type of transactions made by its members. SWIFT now handles about 3.5 billion messages each day.
Considerations
SWIFT is a highly secure system that can be accessed by its members either through a leased line, a dial-up connection or through public data transmission. Each member has its own terminal by which it can access the system and enter its encrypted message. The SWIFT system uses the smart card technology, and it requires its users to enter a user name and a password each time the system is accessed.
Because of the elaborate nature of SWIFT's programming stemming from concerns about security, only trained specialists are capable of sending messages to member organizations. For example, a member bank's customer cannot use SWIFT; however by relaying instructions to the bank, the SWIFT message will be developed and sent by the bank's trained employees.
Potential
SWIFT began as the means by which organizations with banking licenses throughout the world communicated. Today SWIFT not only does business with banks. It also embraces security firms and international corporations that have accounted for the rapid growth of the system. For example, SWIFT experienced--in 2007 alone--a growth of 22 percent in the messages sent by and to its membership.
