How do banks transfer money across the world?
When considering fund transfer to a beneficiary in another country, one is likely to be faced with options such as, SWIFT BIC, CHIPS, CHAPS etc. This article sheds light on these acronyms and explains the underlying transfer protocols and processes that banks employ to service a transfer request.
Transferring money to an overseas beneficiary account requires details beyond the operational capabilities of most banks. To
assist identification of destination banks and to communicate the transfer details, banks use external systems and/or
arrangements. This is achieved in two standard ways,
1. through a bank-to-bank partnership agreement or
2. a globally accepted standard platform.
In a partnership between two banks, transfers are processed according to a previously agreed arrangement. For example, Wells
Fargo's ExpressSend service is based on its partnerships with banks in countries such as Mexico, India, China etc. to process transfers for its
customers. Transfers through such systems tend to be quicker and cheaper.
On the other hand, transfers between banks with
no partnership agreement necessiates the use of a globally accepted platform. SWIFT, as is explained below, processes a
majority of such wire transfers around the world.
Local transfers (those which are initiated and concluded within a country) make use of regional systems such as ACH (US), INTERAC (Canada), CHAPS (UK) etc. to process communication of financial information.
SWIFT (Society for Worldwide Interbank Financial Telecommunication)
SWIFT is a member-owned cooperative of over 8300 banking institutions in more than 208 countries. It provides a platform to
its member banks to communicate financial information securely using standardised messages. Each member bank is assigned a
unique BIC (Bank Identifier Code). It is common for a bank to have more than one BIC, each representing a different operation.
For example, a bank may have separate BICs for personal and corporate banking customers.
ACH (Automated Clearing House) 
ACH is a batch-oriented electronic funds transfer system which provides for interbank clearing of electronic payments for
member banks in the US. It is operated by the Federal Reserve and
Electronic Payments Network. ACH facilitates Direct Deposit of payroll, Social Security benefit payments, tax refunds etc.
CHIPS (Clearing House Interbank Payments System)
CHIPS is a private clearing house for large-value transactions in the US, owned and operated by its members, which constitute
banking and financial institutions with regulated US presence.
Interac 
Interac is a not-for-profit organisation in Canada that operates the
Inter-Member Network (IMN), a nation-wide payment network. Interac and its participating members operate Interac Email Money
Transfer, where money is transfered securely through online banking.
CHAPS (Clearing House Automated Payment System) 
CHAPS provides a platform for bank-to-bank (and business-to-business) same-day payment processing (either sterling or euro)
in UK. CHAPS is one of the largest RTGS systems in the world.
BACS (Bankers' Automated Clearing Services)
BACS is a not-for-profit, membership based, industry body that provides payment processing services to its members. BACS,
which provides two principal electronic payment systems; Direct Debit and BACS Direct Credit, is owned and operated by a 15
member group of banks and building societies in UK.
BPAY 
BPAY is a bill payment service in Australia that allows subscribers
to conveniently receive and pay bills electronically. BPAY Pty Ltd is a wholly owned subsidiary of Cardlink Services Limited (CSL)
which is owned by the four major banks and BankWest.
IBAN (International Bank Account Number)
IBAN is a standard format adopted by banks in the European Union, Israel and some other countries to uniquely identify bank
accounts with an alphanumeric code of atleast 27 characters in Europe and 34 characters outside Europe. A notable exception
is Germany where banks use 22 alphanumeric characters to identify bank accounts. All transfers originating from or destined
for the European Union require an IBAN number.
Since the code is verifiable at the originating bank IBAN-based transfers
do not suffer delays/rejections resulting from incorrect or insufficient beneficiary account details.
RTGS (Real Time Gross Settlement)
RTGS is a system of inter-bank payment processing used by Central banks around the world to electronically settle payments
between its constituent banks. In simple terms, a Central bank debits the electronic account of the payer bank and credits
it to the payee bank's account.
GIRO
GIRO is a payment processing system where a payer instructs their bank to transfer funds to payee's bank account. Unlike
cheque payments, GIRO instructions do not 'bounce' because banks do not process instructions unless there are sufficient
funds in payers' account.