I mean it’s just numbers switching places, why it sometimes take like 2 days? It’s not psyhical paper they are transferring after all.
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I’ve always wondered why too!
Other than the obligatory “banks just want to make the interest for a few more days”, I’m not sure why they take that long..
Answer: The (possibly outdated] explanation I’ve been told was because these transfers go through an external clearinghouse which collects the transaction information, confirms the account information at both institutions, then processes the transaction and sends the confirmation to both institutions. This was an old process that used to take a while just to process the jobs in batches, but also allows the participants a bit of a window to prevent the transfer from happening (in the event of mistake or fraud). It also established a pretty good paper trail in the event of one or the other institutions raising a concern.
Since there is so much abuse or fraud, wire transfers of money have to have many forms of verification and accountability that take time to do.
Wait, where specifically? Because bank transfers here are basically instantaneous, and internationally are usually delivered within the hour from my experience..
SWIFT is basically just a messaging service. There’s no clearinghouse or standard way for banks across the world to make transactions, so it’s a manual process between the two banks.
SWIFT is a messaging system, and an old one. It’s a compatible one which is not really built for speed, and certainly not built for instant transfers. So all of the following is true:
– There may be intermediary clearing banks involved, depending on currency and destination
– There may be delays for fraud and sanctions checks
– You and / or your bank may be paying less for a slower service
– Depending on where you live, there may be no legislation designed to speed up your payment. (What I mean is, in the EU there are certain ‘fast’ guarantees for low-ish value payments, for example)
– Different countries and banks have different standards so, for example, a payment may arrive at the beneficiary bank, but their systems don’t update until next day to reflect that in your balance.
In short, it’s very old tech, and while it’s robust, reliable, and secure (The most important things for international and / or high value payments) it’s not really built for speed.
First try at ELI5: Swift is used when you and the person you want to send money to have different banks. Your bank is not sending money via Swift, it is sending instructions to credit the receiver. That means your bank needs an account with the receiving bank, so that the receiving bank can debit that account and credit the receiver. Things slowing down the transaction can be intermediary banks, your bank don’t have an account with the receiver, so you need a bank inbetween, or that the banks collect all transactions and execute them in one file transfer every business day, so called batch.
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