Payment Routing Explained: SWIFT, SEPA, and Local Rails

Key takeaways

• SWIFT is the global messaging fabric for cross-border payments, used by 11,500+ institutions in 200+ countries.

• SEPA covers euro payments across 41 countries, and SEPA Instant targets funds in under ten seconds.

• Local rails such as ACH, FedNow, and Faster Payments move domestic flows, including a 1 million dollar Same Day ACH limit and always-on services in the United States and the United Kingdom.

Introduction

Payment routing is how you choose the network that carries each payment from origin to destination. For AP, AR, payroll, treasury, and payments product teams, a clear routing plan helps payments arrive faster, reduces returns, and keeps reconciliation tidy. This guide explains the major rails in plain language, shows when each one helps most, and shares practical checks you can fold into your process. You will also find a comparison table and a quick chooser you can use during payment runs or supplier onboarding.

1. What payment routing means for finance teams

Routing blends policy and data. Policy sets preferences by currency, corridor, amount, urgency, and risk. Data makes those preferences work, because names, account formats, and references need to match each rail’s rules. It helps to look at four things for every run: currency and corridor, speed and cost, bank cut-offs and local holidays, and data quality.

2. The main rails and how they work

SWIFT: SWIFT is a secure messaging network that standardizes instructions for cross-border transfers. It connects more than 11,500 institutions across over 200 countries and territories¹. Settlement usually moves through correspondent banks, then into the local clearing system at destination. SWIFT reports that about 90 percent of cross-border payments reach the destination bank within one hour². The shift to ISO 20022 (a richer, structured data format), with coexistence scheduled to end on 22 November 2025³, helps reduce manual repair and improve reconciliation³.

SEPA: The Single Euro Payments Area (SEPA) harmonizes euro payments across 41 countries⁴. Two options appear most often. SEPA Credit Transfer is the standard scheme and commonly follows a D+1 execution on banking business days⁵. SEPA Instant aims to make funds available in less than ten seconds, any day and any time, for participating providers⁶.

Local rails: Domestic rails can be the fastest and most cost-effective route when you are paying in the local currency. In the United States, ACH batches payments on banking days, and Same Day ACH can settle within hours with a per-payment limit of 1 million dollars⁷. The FedNow service runs 24x7x365 for instant USD between participating institutions⁸. In the United Kingdom, Faster Payments is near-instant and always on. Pay.UK notes that some transfers can take up to two hours in certain cases⁹, and the scheme supports limits up to 1 million pounds per payment, subject to bank caps¹⁰. Confirmation of Payee is a name check in the U.K. that helps reduce misdirected payments¹¹.

3. Comparison table for common business routes

Figures are indicative. Actual outcomes depend on participants, compliance checks, cut-off times, weekends or holidays, and downstream clearing. Numerical examples are illustrative.

The table above gives you the big picture. SWIFT covers multi-currency, cross-border scenarios². SEPA is designed for EUR inside Europe⁴⁵⁶. Local rails like ACH, FedNow, and Faster Payments are built for domestic speed and cost efficiency⁷⁸⁹¹⁰.

4. Data quality and controls

Clean data is the simplest way to avoid delays. Validate the beneficiary’s legal name, IBAN or BBAN, and BIC or SWIFT code before the first payment. Include a clear remittance reference that matches your ERP so reconciliation is easier. Maker-checker approvals help for first-time and high-value payouts. For GBP, Confirmation of Payee adds an extra name check when supported¹¹. Rich ISO 20022 fields also help straight-through processing and reduce manual touchpoints³.

FAQ

1. Is SWIFT a payment system or just messaging?
   It is messaging. SWIFT standardizes and secures instructions between institutions. Funds settle through correspondent banks and the destination country’s clearing system¹².

2. How fast is SEPA in practice?
   SEPA Instant targets funds available in less than ten seconds at any time⁶. SEPA Credit Transfer commonly follows a D+1 execution on banking business days⁵. Posting depends on bank cut-offs and holidays⁵.

3. ACH or FedNow for a time-critical domestic USD payment?
   Use FedNow for instant USD between participating banks⁸. If FedNow is not available, Same Day ACH may settle within hours on banking days, subject to windows and the 1 million dollar limit⁷.

4. Is Faster Payments always instant?
   It is usually instant, although Pay.UK notes some transfers can take up to two hours⁹. Limits can be up to 1 million pounds per payment, and individual banks may set lower caps¹⁰. Confirmation of Payee can reduce misdirection risk¹¹.

Conclusion and how Xe helps

If you need a single payment to arrive clearly and on time, a simple route will do. If you run global payables at scale, it helps to combine routing rules with approvals, beneficiary validation, and clear statuses. You can send and track cross-border payouts in one place with international payments. You can keep runs on schedule with scheduled payments and move high volumes with batch payments. When the timing is right for you, start your transfer in the app or on the site.

Citations

¹ SWIFT — Who we are — https://www.swift.com/about-us/who-we-are — (2025)
² SWIFT — Cross-border payment processing speed stretches further ahead of G20 target — https://www.swift.com/news-events/press-releases/swift-cross-border-payment-processing-speed-stretches-further-ahead-g20-target — (2024)
³ SWIFT — ISO 20022 implementation FAQs — https://www.swift.com/standards/iso-20022/iso-20022-faqs/implementation — (2024)
⁴ European Central Bank — Single Euro Payments Area overview — https://www.ecb.europa.eu/paym/integration/retail/sepa/html/index.en.html — (2025)
⁵ European Commission — Your Questions on PSD (execution timing) — https://finance.ec.europa.eu/system/files/2023-06/110222-faq-transposition-psd_en.pdf — (2023)
⁶ European Payments Council — SEPA Instant Credit Transfer rulebook overview — https://www.europeanpaymentscouncil.eu/what-we-do/epc-payment-schemes/sepa-instant-credit-transfer/sepa-instant-credit-transfer-rulebook — (2024)
⁷ Nacha — Increasing the Same Day ACH Dollar Limit — https://www.nacha.org/million — (2022)
⁸ Board of Governors of the Federal Reserve System — FedNow Service overview — https://www.federalreserve.gov/paymentsystems/fednow_about.htm — (2023)
⁹ Pay.UK — How Faster Payments work — https://www.wearepay.uk/what-we-do/payment-systems/faster-payment-system/how-faster-payments-work/ — (2025)
¹⁰ Pay.UK — Faster Payments transaction limits — https://www.wearepay.uk/what-we-do/payment-systems/faster-payment-system/transaction-limits/ — (2025)
¹¹ Pay.UK — Confirmation of Payee — https://www.wearepay.uk/what-we-do/overlay-services/confirmation-of-payee/ — (2025)
¹² SWIFT — Vision and mission — https://www.swift.com/about-us/vision-and-mission — (2025)

** Information from these sources was taken on September 8, 2025.

The content within this blog post is for informational purposes only and is not intended to constitute financial, legal, immigration, or tax advice. All figures and data are based on publicly available sources at the time of writing and are subject to change. Actual conditions may vary depending on location, timing, and personal circumstances. We recommend consulting official government resources or a licensed professional for the most up-to-date and personalized guidance.