SWIFT, Not So Fast


If you’ve ever tried to send an international wire transfer you know what a headache it can be.  You have to fill out multi-page forms at a participating bank, including the routing number, account number, SWIFT number, the recipient’s address and the receiving bank’s address and telephone number.  The fees are never quoted precisely because they are unknown until the transaction is completed.  The waiting period is never less than half a day and usually two.  The only way you know the wire went through is to wait an extra day for the bank to send you an email, if you request it, or call the recipient and ask.  Moreover, both banks have you sign forms that say they are not responsible if the wire does not go through even though they will do their best to keep the information guarded and secret.  The sense of insecurity you get from bank customer service reps, performing the service, does not exactly exude confidence.

A definition of the SWIFT banking system taken from the internet reads —

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications. It is a messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes.

Notice the definition says “a messaging network…to…transmit information.” The system doesn’t carry, or transmit any money, just the instructions to the receiving bank on what to do with the money when it arrives.  All of the hubbub is over trying to keep those instructions error-free and tamper-free.   In the end, the money is sent from one bank to another to another, if necessary, until it has reached the recipient’s bank by predesignated routes.  It’s an archaic system, to say the least.

Ripple is a cryptocurrency designed specifically to replace the SWIFT system.  The bank will convert your money to Ripple currency, send it instantaneously over the internet to the recipient’s bank who will convert it into local currency.  You are notified when the transaction is complete in a few minutes with minimal fees.

The big news today is that Moneygram, the money transfer service is launching a pilot program to test Ripple.  If adopted, Moneygram has an almost unbeatable product.  And, Ripple gets an incredible boost in the cryptocurrency space.