You may have heard the terms SWIFT and telegraphic transfer from investment bankers and traders. However, you may not be aware of what these are and how the two differ. So, before listing out the differences between the two lets understand what SWIFT and telegraphic transfer mean.
What are SWIFT and Telegraphic Transfer?
Swift stands for Society for Worldwide Interbank Financial Telecommunication. This is a service offered to banks and other financial institutions all over the world. Through Swift these institutions can freely and securely send transaction information from one place to the other. It is essential to note that SWIFT is not a method of transferring the money itself, but the information regarding the funds.
Telegraphic Transfer or TT is a method through which interbank funds exchange takes place. Prior to the introduction of the telegraphic transfer, banks had to send a direct Telex message to the destination bank in case of fund transfers.
Differences between SWIFT and telegraphic transfer
• SWIFT is not a fund transfer system. It merely lets institutions send electronic information regarding transactions. Telegraphic transfer, however, facilitated the transfer of funds from one bank or institution to the other.
• SWIFT is an electronic process which does not require wireless connections between the two institutions. Therefore, it works similarly as mobile phones do. TT, on the other hand, required telegraphic wires and the use of Telex to function. Both the beneficiary bank and the sender institution needed to have the telex system handy.
• SWIFT is a handy tool at present, and most traders use it in case of transfers and transactions. This messaging service came into existence after the 1990s. Prior to 1990 however, banks relied on the Telex system, which involved telegraphic transfers. Therefore, telegraphic transfers have almost ceased these days, with more and more banks opting for simpler transfer methods.
• SWIFT is far more secure than the older telegraphic transfers. During the TT days, there was a higher risk to the institution's money than there is now after the introduction of the SWIFT procedure. This process does not transfer the funds, but instead sends the payment orders that must be settled.
SWIFT has quickly replaced the older Telex system and in just 25 years, most banks have stopped the telegraphic transfer of money. Simpler forms of transfer have taken its place, which are both more convenient and safer.
What are SWIFT and Telegraphic Transfer?
Swift stands for Society for Worldwide Interbank Financial Telecommunication. This is a service offered to banks and other financial institutions all over the world. Through Swift these institutions can freely and securely send transaction information from one place to the other. It is essential to note that SWIFT is not a method of transferring the money itself, but the information regarding the funds.
Telegraphic Transfer or TT is a method through which interbank funds exchange takes place. Prior to the introduction of the telegraphic transfer, banks had to send a direct Telex message to the destination bank in case of fund transfers.
Differences between SWIFT and telegraphic transfer
• SWIFT is not a fund transfer system. It merely lets institutions send electronic information regarding transactions. Telegraphic transfer, however, facilitated the transfer of funds from one bank or institution to the other.
• SWIFT is an electronic process which does not require wireless connections between the two institutions. Therefore, it works similarly as mobile phones do. TT, on the other hand, required telegraphic wires and the use of Telex to function. Both the beneficiary bank and the sender institution needed to have the telex system handy.
• SWIFT is a handy tool at present, and most traders use it in case of transfers and transactions. This messaging service came into existence after the 1990s. Prior to 1990 however, banks relied on the Telex system, which involved telegraphic transfers. Therefore, telegraphic transfers have almost ceased these days, with more and more banks opting for simpler transfer methods.
• SWIFT is far more secure than the older telegraphic transfers. During the TT days, there was a higher risk to the institution's money than there is now after the introduction of the SWIFT procedure. This process does not transfer the funds, but instead sends the payment orders that must be settled.
SWIFT has quickly replaced the older Telex system and in just 25 years, most banks have stopped the telegraphic transfer of money. Simpler forms of transfer have taken its place, which are both more convenient and safer.
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