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International Payments: SWIFT or SEPA?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedFeb 20232 min read

You may have seen the terms SWIFT or SEPA pop up quite a lot when banking, but you may not know exactly what these terms represent and how they work. Understanding SWIFT and SEPA is useful because you’re likely to use at least one of them at some point if you ever need to make an international wire transfer.

Both are ways to make international payments, with SEPA serving the Eurozone and SWIFT operating worldwide. When you transfer money to an overseas account, banks need a secure way to communicate financial information to each other, and both SEPA and SWIFT facilitate this process.

What is SWIFT?

SWIFT stands for Society for Worldwide Interbank Financial Telecommunications, and has been the leader in facilitating inter-currency wire transfers since it was introduced in the early 1970s. Just about every country in the world is connected to the SWIFT network, allowing local banks and institutions to process SWIFT transfers.

Not only does SWIFT provide a secure means of sending money abroad, it also makes it very straightforward. Paying somebody overseas via SWIFT is not too dissimilar from a domestic payment. An IBAN is an International Bank Account Number, which is provided with your bank account and tied to the SWIFT network. A BIC is a Bank Identifier Code, which SWIFT assigns to each bank; it is also sometimes referred to as a SWIFT code. To make a SWIFT payment, you’ll need to know the recipient’s IBAN – which they can find in their bank account, and BIC – which can be found online.

SWIFT payments can be made in any currency and converted to any currency. You might choose for the payment to be converted upon arrival, or you may choose to convert the currency before it’s sent. A SWIFT payment can take up to four working days, and SWIFT transfer fees differ depending on the bank. Both the sender and recipient may be charged fees for a SWIFT transfer.

What is SEPA?

SEPA, short for Single Europe Payments Area, is similar to SWIFT, however it exists specifically for banking and transfers within Europe. It is much newer than SWIFT, having only been established in the late-2000s.

SEPA payments can only be in euro, unlike SWIFT which operates in many currencies. 28 EU countries in the Eurozone are part of the SEPA zone, along with Monaco, San Marino, four members of the European Free Trade Association – Iceland, Liechtenstein, Norway, and Switzerland, and other non-Eurozone countries including the UK.

To make a payment via SEPA, you simply need a euro account and the IBAN of the recipient - you don’t need a BIC. In terms of the transfer process itself, SEPA payments happen much quicker than SWIFT transfers. A regular SEPA payment may take up to two days to arrive, however a new scheme known as SEPA Instant Payment or SCT Inst is able to process transfers within 10 seconds.

SEPA payments are also much cheaper to make than SWIFT payments. SEPA transactions are required to be processed under the same terms as a domestic payment, so there are little-to-no fees attached to making a transfer. This is in stark contrast to SWIFT payments, which can sometimes cost upwards of £30 in processing fees.

Collecting payments from European customers can be complicated and expensive!

That’s why GoCardless makes it simple, affordable and hassle-free for merchants to collect SEPA payments.

SEPA vs. SWIFT transfers

When it comes to SWIFT vs. SEPA transfers, the best choice depends mostly on where you’ll be sending the money from, and where you’ll be sending it to. Both networks have the same ultimate goal, to make international payments easier, cheaper, quicker, and safer.

If you need to send euros to a bank account in the EU, using a SEPA transfer would be the wisest choice, as it is quicker and cheaper.

However, if you’re dealing with any currency other than euros, or you’re sending money to a bank account outside of the eurozone, then you won’t be able to use SEPA, so SWIFT would be the best option.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Click here to find out about the many business benefits of collecting SEPA via GoCardless.