What is SWIFT?

SWIFT is the messaging system banks use to move money internationally.

11k+ banks and 200 countries are on it.

It is a peer to peer system.

Nostro account: My account at your bank

Vostro account: Your account at my bank

Correspondent banking: process of opening nostro and vostro accounts. Banks tend to pick a correspondent in another country to allow them to send money to all others in the same space.

Banks rely on correspondent banks to perform proper legal diligence e.g. KYC before sending a SWIFT message.

After SWIFT messaging is done, banks debit and credit nostro and vostro accounts.

Sometimes transactions “hop” around because you want to send money somewhere and your bank doesn't have a direct relationship with another bank there. This reliance is a huge and dumb bottleneck.

Hence, SWIFT can be really expensive and slow.

It costs $40-120 to make a SWIFT payment, or more depending on hops and complexity.

Settlement is another 3 days to 3 weeks.

SWIFT is USD dominant, so having USD makes you most powerful. 50%+ transactions are in USD.

TL;DR: Payments services hold relationships with bank partners, who have limited relationships globally when it comes to SWIFT messaging. Hence, payments services will just limit the type of transactions you can make and pass on any other extra costs to you, the customer. They do this because banks have to comply by a lot of regulatory rules and sanctions so their risk potential is huge.