SWIFT payments explained: fees, intermediary banks and delays

A SWIFT payment is a bank-to-bank instruction, not a direct movement of money through SWIFT. The funds settle through accounts held by sending, correspondent and receiving banks. This distinction explains unexpected deductions, uncertain delivery amounts and payments that appear to stop moving. Finance teams should assess the correspondent route, fee instruction, foreign exchange cost and expected settlement timing before approving an international transfer.

How a SWIFT payment works

SWIFT is a secure financial messaging network. Banks use it to exchange standardized payment instructions, but SWIFT itself does not hold or transfer the money. Settlement occurs through bank accounts, including correspondent accounts maintained between financial institutions.

Suppose a UK company sends US dollars to a supplier whose bank is in another country. If the sending bank has no direct USD relationship with the beneficiary bank, it must use one or more correspondent banks. A typical payment follows these steps:

1. The company submits the beneficiary details, amount, currency and payment purpose to its bank.
2. The sending bank validates the instruction and creates a SWIFT payment message.
3. A correspondent bank moves value between the relevant banks' accounts.
4. Another intermediary may become involved if the first correspondent cannot reach the beneficiary bank directly.
5. The beneficiary bank performs its checks, allocates the payment and credits the supplier.

Banks often describe correspondent balances as nostro and vostro accounts. A nostro account is a bank's account held with another bank, viewed from the first bank's perspective. A vostro account is that same relationship viewed by the bank holding the account.

Each additional institution introduces another processing window, potential deduction and compliance review. The payer may not know the complete route in advance because a bank or correspondent can select downstream institutions based on currency, destination and available relationships.

What an MT103 proves

An MT103 is the traditional SWIFT message for a single customer credit transfer. Finance teams commonly request a copy when a supplier says that an international payment has not arrived.

An MT103 can contain:

• Ordering customer and beneficiary information
• Payment amount, currency and value date
• Sending, intermediary and beneficiary bank identifiers
• Payment reference and remittance information
• The OUR, SHA or BEN fee instruction
• A transaction reference and, where applicable, a Unique End-to-end Transaction Reference

An MT103 is evidence that a payment instruction was created. It is not proof that the beneficiary was credited. The payment may still be waiting at an intermediary, undergoing review, rejected because of incorrect details or returning to the sender.

SWIFT's migration to ISO 20022 means payment information may instead appear in a newer message such as a pacs.008. Banks and suppliers nevertheless continue to use “MT103” as shorthand for the payment message or trace evidence. When requesting documentation, ask for the MT103 or equivalent payment message, the transaction reference, the UETR if available and the latest confirmed status.

How SWIFT fees are charged

The visible transfer fee is only one component of the cost. A cross-border bank payment may include a sending fee, intermediary lifting fees, a receiving fee, an exchange-rate spread and charges for repairing or investigating the payment.

A lifting fee is deducted from the principal while an intermediary forwards the balance. This is why the beneficiary can receive less than the invoice amount even when the payer entered the correct amount.

Not every bank, currency or payment type supports every instruction. Selecting OUR also does not create an absolute guarantee that no downstream institution will deduct a fee. Confirm the bank's treatment and include fee responsibility in the supplier agreement.

Worked cost example

Consider an illustrative USD 50,000 supplier invoice paid from a USD account, so no currency conversion is required. The sender selects SHA. Its bank charges USD 35 separately, a correspondent deducts USD 20 and the beneficiary bank deducts USD 10.

The payer's total debit is USD 50,035, while the supplier receives USD 49,970. The combined economic cost is USD 65, split between the parties, and the invoice remains USD 30 short. Sending the difference can create another transfer fee and another possible deduction.

Foreign exchange can matter more than the explicit bank fees. Finance teams should compare the offered exchange rate with an appropriate reference rate at the time of execution and calculate the monetary difference. A quote showing a small transfer fee can still be expensive if it embeds a wide currency spread.

Why SWIFT payments are delayed

Delivery can range from same-day processing to several business days. The outcome depends on the submission time, currencies, destination, number of banks and quality of the payment data. Common causes include:

• Cut-off times: an instruction submitted after a bank's deadline may not enter processing until the next business day.
• Different calendars: weekends and public holidays can affect each institution in the chain.
• Compliance review: a bank may review the parties, payment purpose, sanctions exposure or supporting documents.
• Data problems: mismatched names, invalid account numbers, missing addresses or unclear references can require manual repair.
• Correspondent queues: an intermediary may receive the message without processing it immediately.
• Funding and liquidity: a bank may need sufficient currency in its correspondent account before releasing value.
• Beneficiary allocation: the receiving bank may hold the funds while matching them to the correct account or invoice.

How to trace a delayed transfer

Start with the sending bank because it controls the relationship through which the instruction entered the chain. Avoid asking only whether the payment was “sent.” Ask where it was last confirmed, whether an intermediary acknowledged it and whether any bank requested information.

1. Collect the amount, currency, value date and beneficiary account details.
2. Obtain the MT103 or ISO 20022 equivalent, bank reference and UETR if available.
3. Check whether the credited amount could be lower because of SHA or BEN deductions.
4. Ask the beneficiary to confirm with its bank using the references, not just its account statement.
5. If the payment is held, determine which party must provide documents or corrected data.
6. Record any return fees and the return reason before resending.

Do not immediately duplicate a delayed payment. A second transfer can arrive while the first remains in flight, creating an overpayment that is difficult to recover.

When stablecoin rails may be a better fit

Stablecoin settlement can be useful when both parties can legally and operationally use USDC or USDT, particularly for urgent payments, recurring batches or corridors with unpredictable correspondent deductions. Value moves over a blockchain rather than through a chain of correspondent accounts, but the complete workflow may still include fiat conversion and a local bank payout.

Stablecoins are not automatically faster or cheaper on an end-to-end basis. A blockchain transfer may settle quickly while fiat conversion, compliance review or local payout adds time. They may be unsuitable when the recipient cannot accept stablecoins, local rules restrict use, off-ramp liquidity is weak or conversion costs exceed bank charges.

Stablerail is designed for companies managing their own USDC and USDT treasury. It supports approvals and signing quorum, sanctions and address screening before send, global payouts, fiat conversion and exportable audit evidence. Those controls help finance teams evaluate stablecoin settlement as a governed treasury workflow rather than treating a wallet transfer as an informal payment process.

Pre-payment checklist for finance teams

• Confirm the beneficiary's legal name, account details and account currency.
• Determine whether either party will incur a currency conversion.
• Select OUR, SHA or BEN in line with the commercial agreement.
• Check the sending bank's cut-off and relevant holiday calendars.
• Estimate delivered cost, including FX spread and downstream deductions.
• Store the payment message, approval, invoice and bank confirmation together.
• For repeat corridors, compare SWIFT with stablecoin settlement using the same destination amount and end-to-end timing.

SWIFT remains broadly useful because suppliers and banks worldwide can receive bank-account payments. The right decision is corridor-specific: compare what the beneficiary receives, when it becomes usable and what evidence the finance team can retain, rather than comparing headline transfer fees alone.