Anatomy of International Payments

Apr 22, 2021
6 min. to read

If you have purchased online on foreign websites or have received payments from overseas, you must have thought about how the payments flow around the globe and which banks and financial institutions underpin global business and exchange.

Also, if you work with foreign vendors and consumers in a business that has multinational supply chains, you will again deal with a dynamic network of organizations and banks that route transfers from one end of the supply chain or the value chain to the other.

Furthermore, when nations trade with each other and when central banks negotiate with each other and banks deal with each other in various countries, they all engage in the international payment mechanism, which is the backbone of global payment flows.

You are requested by your bank to provide the bank details of your beneficiaries to make those cross-border payments. This is when you find out about all kinds of codes, i.e., SWIFT, BIC, IBAN, BSB, ABA, CNAPS are mandatory information for such countries to complete payments.

What would those codes be for? Why do so many codes exist?

To make you understand how international payments work, what the various codes are what they mean, and which codes you need for which countries, we’ve put together this payment guide.

Components and Constituents of the International Payment System

Firstly, who and what are the international payment system’s constituents and components? To begin with, the first layer of international payment is formed by banks and financial institutions, where they hold accounts of other global banks that in turn hold accounts of the former. This allows banks to send and receive payments from each other as they can simply debit their accounts and credit the account of the other bank with them, resulting in payments flowing to the receiving bank debiting the sending bank and crediting their account.

Important Bank Transfer Payment Networks


SWIFT is the acronym of the Society for Worldwide Financial Telecommunication Interbank, a Brussels-based agency which has been around since the early 1970s. It was designed to help banks connect more efficiently and quicker in light of the processing of bank transfer payments.

How is SWIFT functioning?

Today, SWIFT is the world’s biggest multinational payment network, a contact network of more than 10,000 financial institutions in more than 200 countries. Since SWIFT is nothing more than a messenger between banks, we insist on the term’ contact.’

In essence, what SWIFT does is channel the letter containing payment orders from the issuing bank, i.e., the payer’s bank, all the way to the remitting bank, i.e., the beneficiary’s bank.


The acronym for the Single Euro Payments Area is SEPA. It was developed in 2008 to facilitate, inside Europe, cross-border payments in Euros. In other words, a payment made by SEPA is equivalent to domestic payment.

There are 36 countries in the SEPA zone: the 27 EU Member States, the United Kingdom, Andorra, Iceland, Monaco, Switzerland, Liechtenstein, Norway, San Marino, and Vatican City.

How is SEPA functioning?

Even though it is only for Euro transfers within the SEPA region, SEPA operates the same way as SWIFT. Banks either have clear, or indirect, connections (i.e., use a network of intermediary banks).

Payment code for various countries

BIC (also recognized as SWIFT) for international payments

The BIC Code is a standard format for bank identifier codes approved by the International Standard Organization, (also called SWIFT-BIC, BIC code or ISO 9362) (ISO). It is a bank’s unique code of identification. When exchanging money between banks, these codes are used, particularly for international wire transfers, and also for exchanging other messages between banks. Often the codes can be found on account statements.

The Bank Identifier Code or BIC specifies the bank of the payment beneficiary, the bank that will obtain the transfer of funds. To provide automated international funds transfers, a BIC can be combined with the details provided by the IBAN.

While bankers often refer to BIC as a SWIFT code or SWIFT address, do note that BIC differs slightly from SWIFT. SWIFT stands for Society for Worldwide Interbank Financial Telecommunication, global communications, and money transfer banking industry intranet.

How SWIFT/BIC code look?

When transferring money between banks, such codes are used, particularly for international wire transfers or SEPA payments. These codes are also used by banks to exchange messages with each other.

Format of a SWIFT/BIC code

A SWIFT/BIC is an 8-11-character code that recognizes your country, city, bank, and branch

  • Bank code A-Z

4 letters with the bank’s recognition. It generally looks like a shortened version of the name of that bank.

  • Country code A-Z

2 letters that represent the country in which the bank is embedded.

  • Location code 0-9 A-Z

2 characters, which consist of letters or numbers. It says where the Head Office of that bank is.

  • Branch Code 0-9 A-Z

3 digits which specify a specific branch. ‘XXX’ reflects the head office of the bank.

Example of a SWIFT Code

IBAN code for SEPA payments

IBAN stands for International Bank Account Number. It is a unique identifier for a bank account used by banks across Europe to ensure that transfers deliver securely at their destination. For accounts in the EU, as well as accounts in Hungary, Lichtenstein, Norway, and Switzerland, IBAN codes are used. If you’re based in the U.S. but transferring money to a European account, you’ll need to know the IBAN code of your recipient.

What do IBAN codes look like?

Across any country that uses them, IBAN formats are standardized. Up to 34 characters/digits can be used in IBAN codes, but it’s worth noting that this depends on the country where the account is registered.


  • AA – Country code (the country where the account is held and where the IBAN was issued)
  • BB – Check number (this enables the bank to complete an integrity check of the IBAN)
  • CCCC – Bank identifier (identifies the account holder’s bank)
  • DDDDD – Sort code (this will vary according to your account)
  • EEEEEEEE – Account number (this will vary according to your account)

A French bank:

A UK bank:

BSB for Australian payments

The acronym which stands for Bank State Branch is BSB. In addition to the SWIFT code, you must have this 6-digit code when you place an order in Australia.

The BSB code is a six-digit number that is used to classify an Australian financial institution’s particular branch. To classify the beneficiary of a deposit, the BSB code is used in addition to the bank account number. It’s a lot like a SWIFT code, except it’s used for local transactions rather than international ones.

The BSB Code Format is XXY-ZZZ. The bank or financial institution where the money is being sent is specified in the first two digits (XX). A third digit (Y) says the state in which the branch is located. The last three digits (ZZZ) determine the branch’s address.

ABA for US payments

In the US, ABA stands for various things, but in terms of payment, ABA is the acronym for the American Bankers Association. You would also have guessed that the ABA number identifies the location where a bank account was opened (also known as bank routing number or routing transit number-RTN).

What does an ABA code look like?

  • 4 digits to indicate the Routing Code for the Federal Reserve (which tells the Federal Reserve how to process the payment).
  • 4 digits to represent the identifier for the bank.
  • 1 digit for a checksum to be represented. Using the first eight digits, the checksum is a complex mathematical expression. The transaction is flagged and rerouted for manual processing if the result does not equal the checksum.

CNAPS for RMB payments to China

A huge fan of acronyms is the banking sector. Here’s another one: China’s National Advanced Payments Scheme stands for CNAPS.

Besides the SWIFT code, you will need this code only if you are making a payment to the People’s Republic of China in RMB (or CNH for purists). You will only require the SWIFT code if you purchase other currencies (e.g., USD).

Formation of CNAPS

CNAPS is a 12-digit code that will mean precisely the account is in China with the code word CN.

  1. The bank code is defined by the first 3 digits.
  2. The city code represents the next 4 digits.
  3. The next 4 digits indicate the code of the branch.
  4. The verification number code is the last digit.

Bank code for Hong Kong payments

Hong Kong’s bank code has no vague acronyms. Hong Kong doesn’t set a format, unlike other jurisdictions. In addition to the SWIFT code, all you require is a 3-digit bank code, a 3-digit branch code, and a 6-digit to a 9-digit account number.

What does a Hong Kong code look like?

It could look like this if it’s an HSBC account:

The bank code is often listed separately, while the HSBC bank code is 004. It is also popular to see as HSBC 812-852456-8888

Sort code for UK payments

For anything, the sort is not an acronym. The name of this code reverts to the last century when 6-digit sorting codes were replaced by 5-digit national codes (for manual processing) (for automated processing).

So, the sort code is a code that lets the bank sort transfers to the proper UK account

Formation of sort code

A 6-digit code that is often written as three pairs of numbers is the sort code. The bank is identified by the first two digits, and the branch is identified by the remaining four.


There are all the payments when you make an international payment that directly relates

1. Sending Charge/fees

This is the fee charged by the payer’s bank for making a global transaction.

2. Receiving Charges/fees 

This is the fee charged by the recipient’s bank to receive a global transaction.

3. Correspondent banking Charges/fees 

If banks do not have a direct connection, this is the cost that every indirect bank would charge

4. FX fees / mark-up 

This is the conversion fee for various currencies when an international transaction is made.

How much does it cost for a SWIFT payment to be made?

It is practically difficult to predict how much a foreign payment would cost, whether it varies with the banks involved in the trade, the currencies involved, the number, the fees of intermediary banks, etc.

To transfer money from Country A to Country B, you can pay up to USD50. Make sure you use the right SWIFT code to stop losing your payment and paying a refunded payment fee.

There are three ways of paying the global transfer costs while you make a SWIFT payment:

1. SHA (SHAred)

You pay the outgoing payment fee to your bank, and your recipient pays the receiving fee of its bank AND the correspondent banking fees.

2. OUR 

All the banking costs are charged by you as the sender, the full amount of the payment will be issued from your beneficiary. Usually, for those costs, you are paid individually.

3. BEN (BENeficiary) 

You don’t pay much and the receiver pays for anything. From the amount, they get the costs will be deducted.

How much does it cost for a SEPA transaction to be made?

It will charge you a domestic transfer fee when you’re making a SEPA payment (which normally means it’s free).

Processing time

Bank transactions are usually only accepted on the same business day if they are demanded before the cut-off time of the bank. In certain cases, regardless of the time gap, they are processed on the next working day.

However, beware, a bank that handles a foreign payment on the business day does not mean that it will reach the bank account of your beneficiary that same day. What occurs after the payment order is made is beyond your influence. Like you, we’d love to see SWIFT transitions in real-time, but we’re not there yet.

It usually takes 1 to 5 business days for international transfers to arrive at their final destination. But there are a variety of reasons that can hinder your transfer: inaccurate banking records, bank holidays, weekends, time zones, country of destination, regulatory checks, number of intermediary banks, etc.

Office in Hong Kong

Address: Office room 77, 7/F, Woon Lee Commercial Building, 7-9 Austin Ave, Tsim Sha Tsui, Kowloon, Hong Kong


Office Tel: +85268416177
Skype: ygrtima