Swift vs Local Transfers: Which Method is Best for Your Business?

As our world becomes more interconnected, businesses conduct more international transactions than ever. This has led to the rise of two popular methods for transferring money across borders: Swift transfers and local transfers. While both have pros and cons, understanding them can help determine which suits your business the best. In this article, we’ll delve into the pros and cons of each method to help you make an informed decision. So, whether you’re a small business or a large corporation, read on to learn which transfer method suits your needs.

SWIFT and Local Transfers

Swift Transfers

SWIFT stands for Society for Worldwide Interbank Financial Telecommunication. It is a global network that enables banks to securely and quickly transfer funds and messages to one another. SWIFT transfers use a unique Swift code that identifies the sender, recipient, and bank involved in the transaction. In addition, you’ll need to ensure that you have enough funds in your account to cover the transfer amount and any associated fees.

Local Transfers:

Sending money to a foreign recipient’s bank account in their home country using a network of financial institutions is known as a local bank transfer. It eliminates cross-border fees charged for SWIFT payments. FPS, SEPA, Faster Payments, and ACH are examples of domestic payment schemes. To begin a local transfer, one needs the recipient’s bank details, including their local account number and a reference number.

Pros and Cons of Swift Transfers:

Advantages:

1. Reliable and safe: Swift payment transfers are reliable and secure, ensuring funds are delivered safely and quickly. Funds are transferred through a secure network of banks, and transactions are tracked from start to finish.

2. Multiple currency support: Swift transfers are great for businesses that work with clients from different countries. This is because they allow you to send and receive money in different currencies. Companies can use this method to avoid the expenses and potential problems of converting currencies.

3. High level of transparency: Swift transfers offer transparency, and the ability to track international transfers from start to finish. Businesses can track their transactions’ progress and ensure timely delivery of the funds.

Disadvantages:

1.Expensive fees: Swift money transfers can be costly due to the fees involved. In addition to the transfer fees charged by banks, there may also be intermediary bank fees and foreign exchange fees.

2.Unfavourable exchange rates: Exchange rates may not be as favourable as local transfers. Due to unfavourable exchange rates, businesses may receive less money than expected, which can impact their bottom line.

3.Longer processing time: Swift transfers can take longer than local transfers, especially if any intermediary banks are involved. This can delay the delivery of funds and may not be suitable for businesses with urgent payment needs.

Pros and Cons of Local Transfers:

Advantages:

1. Lower costs: The fees for local bank transfers are much lower than Swift transfer fees. This is because they involve low transaction fees. As a result, businesses can save money on transaction costs when making local bank transfers for their foreign exchange needs.

2. Global mass payments: Businesses can use local bank transfers to make mass payments to people in different countries. This is quite helpful for businesses with many international suppliers or employees, as it saves time and reduces the costs of managing payments.

Disadvantages:

1. Delayed processing: Local bank transfers can take a few business days to reach the recipient’s bank account. This is due to the many steps involved in the process.

2. Relative risk: One potential risk of using local transfers for international transactions is that they may not be as secure as Swift transfers. Local transfers rely on a network of financial institutions to process the transaction, which can increase the risk of errors or fraud. Additionally, local transfers may not offer the same level of transparency and tracking as Swift transfers. Unable to check the payment status makes it difficult for businesses to track the progress of their transactions.

Which Payment Method is Best for Your Business?

When searching for a global payment solution, businesses need to consider their transaction’s aim. SWIFT and local transfers are secure and accessible payment methods, but they differ in fees, transaction speed, platform intuitiveness, and customer service. Thus, aligning your payment solution with your specific transaction requirements is crucial. By doing so, you can ensure that you choose a payment method that best fits your business needs and goals.

You can also explore our other online international payment methods, such as virtual accounts and digital wallets.

At Winvesta, we offer virtual multi-currency accounts that can further reduce transaction costs. You can receive payments from 180 countries in over 34 currencies faster and cheaper. Withdraw your earnings to INR in as less as 1 day at rates starting at 0.99%!

You get to save time and money with no hidden costs and full transparency.

Open your virtual multi-currency account with Winvesta today!