Difference between Telegraphic Transfer and Swift

Posted on 10 April 2023 Category : Export Import Terms

The information provided here is part of Online Training Course on howtoexportimport

Difference between ‘Telegraphic Transfer’ and ‘Swift’

This is another common question among traders about swift and TT (Telegraphic Transfer). What is the meaning of Telegraphic Transfer, How does swift work? Whether swift and TT are same?

Before differentiating Swift and Telegraphic Transfer, let us find out What is swift and what is TT?

I have written about SWIFT in my other article in same website. However, in order to differentiate, let me explain once again:

What is Swift ?

Society for Worldwide Interbank Financial Telecommunication is abbreviated as SWIFT. SWIFT extends service of network which enables banks and other financial organizations all over world to send and receive financial transaction information in a standardized, secured and reliable environment. SWIFT does not facilitate funds transfer; but SWIFT sends payment orders, which must be settled by correspondent accounts that the institutions have with each other. SWIFT CODES means bank identification codes allotted to each bank all over world. SWIFT has been introduced after popular TELEX system service which had been used before 1990s.

The service of Telex is too slow and had no standardized format for the data it transfers, added up to an inefficient system apart from its insecurity. In order to solve the demerits of Telex services seven major international banks gathered together to discuss a suitable replacement of telex in the year 1974. After three years, in 1977, a society was formed and 230 member banks from 5 countries started operation of SWIFT. SWIFT has now more than 10000 members worldwide (more than 200 countries) handles more than 15 million messages daily. Any financial institution who holds a banking license can become a member of SWIFT by paying a joining fee and service charge for each message sent.

How does TT (Telegraphic Transfer) work?
What is a Telegraphic Transfer TT?

Telegraphic Transfer is a mode of transfer of funds electronically before the year 1990s.

TT, Telegraphic Transfer of money was effected by a cable message service from one bank to another to transfer money. Before introduction of Telegraphic Transfer, money had been transferred directly between banks via a Telex message sending directly from one bank to another. TT payment was very popular prior to existence of electronic payment networks. Telegraphic transfer is operated by cable message and TT is treated one of the other electronic fund transfers.

Also read - How does Wire transfer work in international business? Difference between Swift and wire transfer Any difference between Wire Transfer and Telegraphic Transfer? What is swift transfer in import and export trade?

The above information is a part of Export import business Course online

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Comments

Elambilai Sreejith: On 06 June 2013 Good information...

James Sciaffo: On 08 February 2015 I sure do remember the very first SWIFT message that came of the machine in 1977 at MORGAN GUARANTY TRUST CO.OF NEW YORK, located at 15 Broad St. It was directly across from the N.Y. STOCK EXCHANGE (present day J.P. MORGAN-CHASE).Thanks to all the mergers of the mid 1980's, so many jobs in banking were lost-forever !We worked in the "Money Transfer Wire & Cable Dep't.) and all messages and payment instructions were sent via Western Union telex and cables that had to be tested first for authenticity. The cable machines were big, noisy and hot and there were so many them all around the work floor. They were often broken, message received garbled, broken ribbons, split or twisted ribbons, no ink and so on ! By today's standards, it was archaic, primitive,and very low-tech. The "testing process" also was arduous and inefficient. Special testing codes, keys, machines and formulas had to be constantly changed and modified to avoid fraud and authenticate all the instructions. A huge and secured "cage" was the testers office and we had an assembly-line of sorts to pull out cards from various banks around the world and manually check-off prefixes and fill in dates and sequences on the cards and put them on the beltway for telex messages we received from banks and then send them on their way inside to complete and complete the test code key for validation. Pat Sweeney was the Service-Desk manager and helped get the SWIFT system off the ground 38 years ago, way back in the Disco era of 1977! The tiny and rickety little machine began to shake and hiss that Summer day and....Voila ! History was made and SWIFT revolutionized inter-bank correspondence and communication. As time went on, the system became totally automated, no need to test individual messages, it was far more efficient, way less expensive that old telexes and it slowly went international. Today, old telexes and cables are virtually obsolete and SWIFT is the industry standard.

adam lyanda: On 11 June 2015 lam not clear on the meaning of TISS...ANY PERSON CAN HELP.

David: On 31 December 2016 Hi which banks and Countries still can provide telex code to receive telex transfers? No Swift or IBAN, only Telex Code, your early reply with info is well appreciated Thank you David

Paloma: On 18 November 2021 Hi which banks and countries still can provide telex code to receive telex transfers. Thanks in advance,Paloma.

Difference between Telegraphic Transfer and Swift

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