Your business has several options for transferring money across borders—including SWIFT and local bank transfers. Each method has its own strengths, but when it comes to SWIFT vs local bank transfers, which one is best for your business?
In this article, you’ll learn the key differences between SWIFT payments and local bank transfers to help you decide which option best suits your business needs. You’ll also discover how Aspire can make your cross-border transactions more seamless and efficient.
What is a SWIFT Transfer?
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. It is a global transfer system that facilitates international payments through the SWIFT network—a secure messaging system connecting thousands of banks worldwide. Each participating bank is identified by a unique SWIFT code, allowing funds to be routed accurately, often through intermediary banks when a direct connection is unavailable.
SWIFT transfers—also known as Telegraphic Transfers (TT)—are widely used for international business transactions due to their broad global reach and reliability.
How SWIFT Transfer Works
A SWIFT transfer starts when you provide your bank with the recipient’s details, including their bank account number and the bank’s SWIFT code. The SWIFT network then routes the payment through a chain of financial institutions—sometimes involving intermediary banks—until it reaches the final destination.
Each bank in the network verifies the transaction, helping ensure a secure cross-border payment process. Depending on the countries and banks involved, the transfer can take 1 to 5 business days. Additional fees may be charged at different stages, particularly when intermediary banks are part of the transaction.
What is a Local Bank Transfer?
A local bank transfer is a straightforward method of moving money within the same country, directly into the recipient’s bank account.
Unlike SWIFT payments, local transfers do not rely on the SWIFT network. Instead, they use domestic payment systems, which makes them faster and more cost-effective. These systems are supported by local clearing networks such as Faster Payment System (FPS) in Hong Kong, Automated Clearing House (ACH) in the United States, and the Single Euro Payments Area (SEPA) in Europe.
Some fintech platforms and international payment services also provide access to these local networks, allowing you to send funds to local recipients even if your business account is registered outside the destination country.
How Local Bank Transfer Works
To initiate a local bank transfer payment, you first need to choose a payment platform, such as Aspire. After selecting the platform, you enter the recipient’s account details—such as their bank account number or IBAN—to begin the transfer.
The platform then routes the payment through its correspondent bank in the recipient’s country. This setup allows your payment to be processed as a local transfer, even if your business account is based abroad. Once the correspondent bank receives the funds, it transfers the full amount to the recipient’s local bank account.
The process is typically completed on the same day, and in some cases, instantly, depending on the destination bank’s real-time payment infrastructure. Because the transaction avoids international routing, local bank transfers are faster and more cost-effective than traditional cross-border methods.
Key Differences Between SWIFT and Local Bank Transfer
Network
The SWIFT network serves as the backbone of international transfers, connecting over 11,000 financial institutions worldwide. It uses standardised SWIFT codes to route funds accurately, often through intermediary banks, ensuring the money reaches the correct recipient across borders.
By contrast, local bank transfers operate within a country’s domestic payment infrastructure, bypassing the SWIFT network entirely. This makes them simpler and faster—but only within supported regions. Since local clearing systems have limited geographic coverage, SWIFT remains the most widely used and practical method for global transfers, especially when sending money to countries where local options are unavailable.
Speed
SWIFT payments typically take 1-5 business days to reach the recipient's bank account, as they involve multiple financial institutions and intermediary banks in the SWIFT network. Delays can occur due to time zones or compliance checks for cross-border payments.
On the other hand, local transfers are much faster, often completed within hours or instantly for local payments within the same country. The absence of intermediary banks in local bank transfers speeds up the process significantly.
Fees
SWIFT payments often involve higher fees, as you need to pay the intermediary bank fees, the SWIFT network, foreign exchange fees, and the receiving bank fees. When sending funds via SWIFT, you can typically choose who bears these charges. The three common options are:
- OUR – The sender pays all fees.
- BEN – The recipient pays all fees.
- SHA – Fees are shared between the sender and recipient.
In contrast, local transfers are usually low-cost or even free, since they rely on domestic clearing systems and don’t require intermediary banks. For businesses, this makes local payments a cost-effective choice for transactions within supported countries.
Understanding the fee structure of each method helps you select the most suitable and economical option for your needs.
SWIFT vs Local Bank Transfer: Which One Should You Choose?
Choosing between SWIFT and local payments depends on several factors. These are the guides that can help you decide which method should you choose for international transactions.
Destination Country
Before sending money, consider the destination country. If the transfer is within the same country or payment zone, a local bank transfer is usually the better option—it’s faster and more cost-efficient than a SWIFT transfer. However, for international payments, especially to countries with unfamiliar or less accessible payment systems, SWIFT transfers remain the most reliable choice due to their global reach and standardisation.
Transfer Amount
The transfer amount is also an important factor when deciding between SWIFT and local bank transfers. SWIFT transfers are better suited for larger cross-border payments, which can justify the higher fees compared to local bank transfers.
Urgency
You should also consider the urgency of your transfer when sending money abroad. If you need to make a cross-border payment quickly and have access to the destination country’s local payment system, local bank transfers are preferable, as they can often be completed within one day.
However, if the transfer is not time-sensitive or the destination country’s payment system is less accessible, SWIFT transfers may be the more suitable option.
Payment Service Providers
The most important factor is to check which transfer services your payment provider offers. Some providers grant access to local payment networks for international transactions, while others may only support SWIFT transfers. Therefore, it’s crucial to choose a payment service provider that gives you the flexibility to select between local bank transfers and SWIFT transfers based on your business needs.
Enjoy Low-cost International and Local Transfers with Aspire
If you’re looking for a payment platform that offers flexibility for global transactions, Aspire could be the right solution for your business.
With an Aspire Business Account, you can send SWIFT payments in over 30 currencies to more than 130 countries, all with low, transparent fees and FX rates up to three times lower than traditional banks. You can also enjoy same-day transfers to over 15 countries.
Aspire also supports local transfers from your HKD, CNY, USD, EUR, and GBP accounts—allowing you to make outbound payments in these currencies without incurring currency conversion fees.
Whether you’re managing cross-border payments or domestic transfers, Aspire provides a unified solution to streamline your financial operations. Explore Aspire today and simplify both your local and international payments with confidence.
Frequently Asked Questions
Is SWIFT Transfer the Same as Bank Transfer?
A SWIFT transfer is a type of bank transfer that differs from a local bank transfer. SWIFT payments use the SWIFT network to facilitate cross-border payments between financial institutions globally, often involving intermediary banks.
In contrast, a local bank transfer occurs within a single country’s banking system, delivering funds directly to the recipient's bank account without the SWIFT network.
Do I Need a SWIFT Code to Transfer Money Locally?
No, you typically don’t need a SWIFT code for local bank transfers, as they don’t rely on the SWIFT network. Local payments are processed within a country’s domestic banking system, using details like the recipient's bank account number or IBAN.
SWIFT codes are only required for cross-border payments through the SWIFT network, where financial institutions and intermediary banks are involved. For local transfers, banks use local clearing systems, making the process simpler and faster.
What Are the Disadvantages of SWIFT Transfer?
While SWIFT payments are widely used for cross-border transactions, they come with several drawbacks. One of the main concerns is speed—transfers can take 1 to 5 business days, as payments are routed through multiple intermediary banks and financial institutions.
Fees can also accumulate at various stages of the transfer, especially when several intermediary banks are involved. In addition, currency conversion rates may not always be favourable, potentially reducing the final amount received by the beneficiary. Compliance checks and regulatory requirements can further delay processing times.
Frequently Asked Questions
