How Can You Make Your Business’s International Payments SWIFT and Cheap?

How Can You Make Your Business’s International Payments SWIFT and Cheap

Here is how you can save your business from hidden transaction costs!

Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is a secure messaging system between banks across international borders. It is the principal mechanism for facilitating international trade. SWIFT has received a lot of attention recently because, in February, the United States and several European countries, took the decision to ban select Russian banks from SWIFT. This decision was taken as a response to Russia’s continued military action on Ukraine. 

The SWIFT system is used by 11,000 banks across 200 countries. With SWIFT being a crucial part of cross-border banking, it is crucial that budding entrepreneurs become well-versed in how the system works. Let’s try to understand SWIFT, what it means for businesses and how international payments can be simplified. 

SWIFT explained

SWIFT was founded in Belgium in 1973 and is overseen by the National Bank of Belgium. The easiest way of understanding SWIFT is by likening it to Gmail for banks. It does not directly transfer funds between banks but rather simplifies the process of communication between banks. Banks use SWIFT to send each other instructions on how to process transactions. This helps banks process high volumes of transactions at a quick pace. As of 2021, SWIFT has transmitted 42 million messages every day. 

The system assigns each financial institution a unique identifier code of eight or eleven characters. This code has several names, such as bank identifier code (BIC), SWIFT code, SWIFT ID or ISO 9362 code. SWIFT allows for real-time instruction matching for forex (foreign exchange) transactions. If you run a business with employees abroad or have buyers/suppliers abroad, SWIFT will help you pay salaries and transfer funds in a secure and timely manner. 

Hidden costs of international payments

It might sound like a great idea to hire people from a different country. It’ll increase the talent pool you can hire from and, in certain countries, it could also mean hiring a cheaper workforce. However, paying said employees can be a huge obstacle.

As of 2019, bank transfers (facilitated by the SWIFT system) can charge you anywhere between US$25 to US$65. While large transfers sometimes have no fees, the small business owner who was hoping to save from hiring internationally gets buried under these fees. Not only does your business have to bear the cost, but your employees or collaborators also have to pay a fee of US$10 to US$25 upon receiving payment.

Typically, a transaction takes 3 to 5 days to process. Banks use this additional time to check the legitimacy of the transaction to protect themselves from money laundering. If your business needs to urgently pay a supplier abroad, then it would cost you an additional 10% on top of your additional amount to make the payment happen on the same day. 

The bank would also charge you a certain exchange rate on international transactions as well as about US$50 more if you want to trace the transaction. With all these charges and fees added, chances are you would end up spending a lot more than you had imagined. 

How to make cheap international payments?

If all the costs we mentioned above made you lose heart in hiring employees abroad or expanding, don’t worry. There are several platforms and services that can help you seamlessly carry out international transactions. Two big options are Wise and Ripple.


Wise, previously known as TransferWise, is an international payment service that is 13 times cheaper than traditional exchange services. Wise has accounts all over the world and allows transfers in 50 different currencies. The company has no hidden fees; you know what you are getting into even before you make a transaction. The service locks the exchange rate so that the value of the transaction does not change before it reaches its destination.

If you create a business account on Wise, then you can send money to about 1,000 people at the same time without paying 1,000 times the transaction fee. It is simple to use Wise, as the sender only needs to have an account to make the transaction happen. 


Ripple is a blockchain-based digital money transfer network. The platform has its own native token XRP. XRP acts as an intermediary between two currencies, be it fiat or crypto. The main selling point of using Ripple for financial transactions is that its transaction cost is as low as 0.00001 XRP (or US$0.08174 as of April 6, 2022) for cross-border payments. The service also boasts a quick transaction speed, with the settlement of transactions usually taking only between four and five seconds. 

Ripple is used by many financial institutions. Some even believe that Ripple could replace SWIFT in the future, as it takes away the need for multiple intermediaries as well as markups required to carry out services, with XRP acting as a bridge between currencies. However, before you jump into using Ripple, it is important that you look into the fact that Ripple has an ongoing case against the U.S. Securities and Exchange Commission (SEC) for its failure to register the sales of XRP. This case has made financial institutions and exchanges wary of Ripple.

Header image courtesy of Freepik


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