SWIFT Banking: What Small Businesses Need to Know

Working with international customers, suppliers and business partners often means moving money across borders. For Canadian small businesses, these transactions need to be secure, reliable and cost-effective, especially when payments involve different currencies and banking systems.

One of the most widely used ways to facilitate international bank transfers is SWIFT. But what exactly is SWIFT banking, how does it work, and when should a small business use it?

Here's what Canadian businesses need to know about SWIFT payments, including how they work, what they cost and how to avoid common delays.

Key takeaways

• SWIFT is a global messaging network that helps financial institutions facilitate international bank transfers. It doesn't directly move money between accounts.
• Small businesses use SWIFT to pay international suppliers, receive overseas payments and manage cross-border transactions.
• Transfer fees, currency conversion and intermediary banks can affect the total cost and timing of SWIFT payments.

What is SWIFT banking?

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a secure messaging network that banks use to send each other payment instructions. It isn’t a bank and doesn’t move money itself. It just carries the information banks need to process international transfers.

When a business sends money overseas, its bank uses SWIFT to pass the details to the recipient’s bank: who’s sending, who’s receiving, the account information, and the amount and currency.

Every bank on the network has a unique SWIFT code (also called a Bank Identifier Code/Business Identifier Code, or BIC) that identifies it and makes sure the instructions reach the right place.

How do SWIFT payments work?

A SWIFT payment typically involves several steps:

1. The sender initiates the transfer: The business provides its bank with the recipient's banking details, including their name, account number or IBAN, and SWIFT/BIC code.
2. The sending bank processes the payment: The bank verifies the payment details and sends the instructions through the SWIFT network.
3. Intermediary banks may get involved: If the sending and receiving banks don't have a direct relationship, one or more intermediary or correspondent banks may help facilitate the transfer.
4. The recipient's bank receives the instructions: Once the payment reaches the recipient's financial institution, it completes any required checks and credits the funds to the recipient's account.

Not every transfer requires intermediary banks. However, they can be involved when payments move between financial institutions that don't have a direct banking relationship.

How do small businesses use SWIFT payments?

SWIFT payments are particularly useful for businesses that regularly work with international customers, suppliers or contractors.

Paying international suppliers

Businesses importing inventory, equipment or materials can use SWIFT transfers to pay vendors in other countries. For example, a Canadian retailer purchasing inventory from a supplier in Germany may need to send payment in euros. A SWIFT transfer allows the retailer to arrange an international bank payment using the supplier's banking details.

Receiving payments from overseas customers

Companies selling products or services internationally can receive payments directly into their business bank accounts. SWIFT provides a widely supported way for international customers to pay Canadian businesses without relying on physical cheques or cash transfers.

Paying international contractors

Businesses working with overseas freelancers, consultants or service providers can use international wires to transfer funds. This is particularly useful when paying contractors who operate in countries with different banking systems.

Managing multiple currencies

Companies operating in different markets can use SWIFT to facilitate payments in major currencies, including USD, EUR and GBP. This can help businesses manage international invoices and supplier relationships while reducing the need for multiple payment methods.

How much do SWIFT payments cost?

SWIFT payments can involve several fees, and the total cost depends on the financial institutions and currencies involved, including:

• Sending fees: The sender's bank may charge a flat fee to initiate an international wire transfer. These fees vary by institution and account type.
• Intermediary bank fees: Correspondent banks involved in processing the payment may deduct their own charges. These fees can reduce the amount that ultimately reaches the recipient.
• Receiving fees: The recipient's bank may charge a fee to accept an incoming international wire.
• Foreign exchange fees: If the payment involves currency conversion, the financial institution may apply an exchange rate markup or conversion fee. Want to see how much foreign exchange fees can cost you? Check out Float’s CAD to USD FX calculator  and see how much it costs and, more importantly, what you can save with the right partner. 

Some banks offer different fee arrangements, such as OUR, SHA and BEN. These determine who is responsible for covering the transfer fees: the sender, both parties, or the recipient.

Before initiating a payment, businesses should confirm the total fees, exchange rate and expected amount the recipient will receive. This is particularly important when paying invoices for a fixed amount, since intermediary fees or currency conversion can result in the recipient receiving less than expected.

How long do SWIFT payments take?

SWIFT payments can reach the recipient's bank relatively quickly, but the time it takes for funds to appear in the recipient's account varies.

According to SWIFT, more than 90% of payments reach the beneficiary bank within an hour. However, the final crediting process can take longer depending on the receiving bank, local banking hours, time zones and compliance checks.

In practice, businesses should generally allow one to five business days for an international wire, depending on the destination and financial institutions involved.

Incomplete banking details, public holidays, intermediary banks and additional security checks can also delay a payment.

How can businesses make SWIFT payments more efficiently?

A few simple practices can help Canadian businesses reduce payment delays and avoid unnecessary fees.

Double-check recipient details

Confirm the beneficiary's name, account number or IBAN, bank address and SWIFT/BIC code before submitting a transfer. Incorrect information can lead to delays or rejected payments.

Confirm the payment currency

Whenever possible, agree on the invoice currency with the recipient beforehand. This helps both parties understand potential conversion costs and avoid unexpected deductions.

Understand transfer fees

Ask your financial institution about sending, intermediary and receiving fees before initiating a payment. Consider who will cover these costs to ensure the recipient receives the agreed amount.

Plan around processing times

Account for time zones, bank holidays and transfer cut-off times when scheduling international payments, particularly when working with strict supplier deadlines.

Keep payment records

Save invoices, transfer confirmations and payment references to make it easier to track transactions and reconcile international payments later.

These practices also support better cash flow management by helping businesses anticipate when funds will leave or arrive in their accounts.

A simpler way to receive international payments

Receiving international payments through SWIFT can help Canadian businesses work with customers and partners around the world. Understanding how transfers work, what fees to expect and which banking details to provide can help reduce delays and make cross-border payments easier to manage.

With Float Business Accounts, Canadian businesses can receive international SWIFT wire transfers directly into their CAD and USD accounts. Payments sent in other currencies are automatically converted to CAD upon receipt and credited to the business's CAD account. Dedicated wire details for each currency make it easier to collect international payments and manage incoming funds across borders.