There are many ways to process the inward remittances, i.e. the money transferred from a foreign bank account to an Indian bank account. However, SWIFT payments are old and still preferred options by many individuals and businesses in India.
What are SWIFT Payments? How do They Work?
SWIFT payments are wire transfers made between two international bank accounts through the SWIFT international payment network, which is one of the largest financial messaging systems in the world.
For your international customer/client to send you payments via the SWIFT mechanism, they need to follow the same steps they follow when making wire transfers locally, which are:
- Log into their online banking service.
- Initiate an international wire transfer by entering your details, which are:
- Your name and your bank’s name
- Your account number or IBAN (International Bank Account Number)
- Your SWIFT code (can be obtained from your bank’s website)
- Enter the currency and the amount of the transfer
- Verify and approve the transfer
Now, even though SWIFT payments are the classic way to send or receive payments to/from your international businesses, it’s certainly not the best. This is because we live in the era of Fintech where better options are available. This is the period when the finance industry is teeming with technology to offer businesses and individuals faster, reliable and cheaper services. So, you no longer have to make do with whatever options you get from your traditional bank.
Drawbacks of SWIFT Payments:
- High Charges
For every payment that you receive from your international client, there are multiple deductions- a flat fee for each transaction, currency conversion charges, and even handling fee or miscellaneous charges by third party service providers.
- Slow Transfers
Payments made via the SWIFT network can take as many as 4 days to reflect in your bank account.
- Inefficient Process
The very process of SWIFT payments is inefficient and more of a hassle. Imagine what your customers have to go through when making a SWIFT payment for the first time- entering your bank account details in their online banking service, enabling international payments (if disabled), increasing the wire transfer limit (if necessary), entering the payment amount and currency, and then finally authenticating the payment.
Today, we like to make most of the payments with just a few taps on a smartphone or a few clicks on a computer, which is why the SWIFT payments clearly appear outdated and slow.
Alternatives to SWIFT
Foreign Exchange Companies and eWallet Companies are two good alternatives to SWIFT if you are looking for a reliable service and lower costs. However, from a business’s perspective, you can benefit from a lot more from a dedicated payments platform. The reason behind this is that you are going to send and receive a great number of payments, and for that, your selection of payments option is extremely important.
A dedicated payments platform which you can actually combine with your invoices is the right way to manage your inward remittances. The following are some of the top reasons why:
- Making payments is easier for your clients when they don’t have to enter your banking details on a portal for every new invoice.
- Your clients can enjoy multiple payment options, especially the credit cards.
- You can receive payments much faster than other methods.
- The transaction fees are much lower.
- It gives your business a professional touch and increases credibility.
By integrating a dedicated payments service into your invoices, not only you can make it easier for your clients to make the payments, you can also make it easier for yourself to track the payments and review the cashflow. Imagine the kind of time you can save when checking the payment status of dozens of invoices every month, and identifying your best clients with this.