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Remittance slip example for Logistics

[Music] swift also called society for worldwide interbank financial telecommunications is a message network which is used by financial organizations such as banks and money brokers to communicate with each other using predefined messages and instructions put it simple swift is just working like a social network in which the users are all financial institutions each user will have a unique swift id and they can securely send and receive information between each other for their daily business such as money transfer etc this will enable the payee to transfer money to an account located in another bank in other countries to uniquely identify a financial institution swift assigns every financial organization a unique code which usually has eight or eleven characters as for the eleven character swift code the first eight characters will be the same as the eight character swift code and the last three codes are usually used to identify individual branches in the classical eight character swift code the first four characters are the institute code which is used to identify the financial institution the next two characters indicate the country code and the last two characters represent the location or city code let's take a look at this example about how the swift system works during a transaction let's assume that alice wants to transfer one hundred dollars from her u s bank account to bob's bank account in australia a simple scenario is that the two banks both have a commercial account with each other which means they do have an established relationship if that is the case alice's bank will send a swift message or payment instructions to patrick's bank within a few minutes then alice's bank will deduct 100 dollars from her account and bob's bank will credit one hundred dollars in its commercial account the last step is to credit one hundred dollars to bob's personal account minus any fees charged for the transfer a complex scenario is that both banks do not have a commercial bank account with each other if that is the case they need to find a third bank which both banks have commercial accounts with this third bank will act as the bank in the middle to handle the transaction and the step will be like the following alice's bank will deduct 100 from her personal bank alice's bank will notify the bank in the middle to debit their commercial account by 100 and credit the commercial account of bob's bank for the same amount bob's bank will then credit the money to bob's personal account in this scenario since there are more steps involved in the whole process more fees might be charged and more processing time will be needed than the previous simple scenario a more complex scenario is that more different currencies are involved during the transaction as mentioned in the previous example some extra time and fee might be needed for the currency exchange since swift can be considered a social network which is owned by its members a fixed income of swift is coming from all these members paying a one-time joining fee and annual charges each year also for each message sent in the swift network the sender will be paying a small fee for it usually different financial organizations will be in different charge tiers based on the volumes of messages they will be sending in a year also some extra services provided by swift such as business intelligence reference data and compliance services can also provide revenue for this network thanks for watching if you like the video please hit the like button or subscribe button for more interesting topics [Music]