Month: April 2023

SEPA Credit Transfer Overview

A SEPA Credit Transfer (SCT) is a payment instrument which facilitates the transfer of funds from the sending or originating bank to the receiving or beneficiary bank.

They generally used for once off payments and clear within a day. To send/receive a SEPA Credit Transfer, the originating and beneficiary banks must be SEPA participants.

Debtors and creditors use SCT Transfers conducted in Euro currency, which include IBANs and BICs for identification.

A SEPA Credit Transfer(SCT) involves the exchange of a number of messages between a debtor, their bank, the clearing and settlement (CSM) exchange and the beneficiary bank.

The SCT relies on 4 actors:

  • Originator, i.e the person making the payment
  • Originating bank, i.e the bank which contains the account of the originator
  • Beneficiary, i.e. the person receiving the payment
  • Beneficiary bank, i.e the bank which contains the account of the beneficiary
SEPA Credit Transfer

The originator and beneficiary use different ISO 20022 messages to initiate and complete the credit transfer. These messages are categorised as follows:

  • Payment Initiation (Pain). Sent/received between the customer and their respective banks.
  • Payment Clearing and Settlement (Pacs). Sent/received between the originating/beneficiary banks and the CSM.
  • Cash Management (Camt). Sent to the originator/beneficiary to inform them of their account balances as a result of payment transaction.

Pacs.004 Message

Overview

The beneficiary bank uses the pacs.004 message to trigger the return of a settled payment. One possible reason for the return of a settled payment is that the beneficiary bank account no longer exists.

The pacs.004 message must identify the returned payment. The UETR (Unique End-to-end Transaction Reference) and the end-to-end-id identify the payment a pacs.004 refers to.

Building Blocks of the Pacs.004

Like other payment messages in ISO20022, the pacs.004 contains 2 main parts. You can find the definition of the pacs.004 schema and its message definition report here.

GroupHeader

The GroupHeader will contain the set of characteristics that are common to all transactions contained in the pacs.004.

The most important of these is the MsgId which used to uniquely identify the message. It is mandatory and must be unique

GroupHeader Pacs.004

Transaction Information

The transaction information sections of the pacs.004 will contain all of the information used to identify the transactions that are being returned. There are a number of mandatory elements which must be present.

  • RtrId – Unique identification, as assigned by an instructing party for an instructed party, to unambiguously identify the returned transaction.
  • OrgnlEndToEndId – Unique identification, as assigned by the original initiating party, to unambiguously identify the original transaction
  • OrgnlUETR – Universally unique identifier to provide the original end-to-end reference of a payment transaction
  • OrgnlInstrId – Unique identification, as assigned by the original instructing party for the original instructed party, to unambiguously identify the original instruction.
Transaction Pacs.004

SEPA Credit Transfer in Detail

When a SEPA Credit Transfer the originator exchanges a series of messages with the beneficiary through the originating and beneficiary bank and CSM.

The following diagram indicates this flow of messages.

SEPA Credit Transfer in detail

Customer to Bank Messages (PAIN)

A customer will send Payment initiation (Pain) message(s) to their bank to initiate a payment. Pain messages are customer to bank messages.

MessageDescription
pain.001This is the payment initiation message. Used to initiate the credit transfer. For more information see here
pain.002This message is used to inform a customer whether their transaction was successful or not. For more information see here

Cash Management Messages (CAMT)

Customers receive their cash management reports from banks using the Cash Management (CAMT) family of messages.

MessageDescription
Camt.052This message is the account report. It used to inform the customer of their account balances after a transaction.
Camt.053This message serves as the account statement. Additionally, it will include an opening and closing balance, along with the details of processed transactions. For more information see here
Camt.054This message is used to inform a customer about a debit or credit on their account. For more information see here
Camt.056This message is used by the originator bank to recall an SCT. For more information see here
Camt.029This message is used by the beneficiary bank to inform the originator bank that their request to recall the SCT has been denied. For more information see here

Interbank Messages (PACS)

Banks use Payment and Clearing messages (PACS) to settle and clear funds.

MessageDescription
Pacs.008This message facilitates the movement of funds from the originating bank to the beneficiary bank. For more information please see here
Pacs.002This message represents a payment status report message. For more information please see here
Pacs.004This message is used to undo a payment that has already been settled. It is issued by the beneficiary bank. In general, there are a number of reasons for this to occur, such as the account being previously closed at the beneficiary bank. Moreover, this message is also utilized to indicate that a recalled SCT has been successful.

Camt.029 Message

The camt.029 message is the response the beneficiary bank sends to the originator bank when it rejects the camt.056 that the originator bank sent.

The camt.056 is a recall message used to cancel a credit transfer. It is the response to that camt.056 indicating that the camt.056 request was unsuccessful.

The camt.029 is a notification message. It is also known as a resolution of investigation and indicates to the originator that there will be no movement of funds to the originator.

The camt.029 is the opposite of the pacs.004 (positive response). The definition of the camt.029 and its message definition report can be found here.

Building Blocks of Camt.029

Camt.029 is composed of two blocks:

CaseAssignment

Identifies the party that initiated the investigation. It will also identify the party who the investigation refers to. It will contain the following elements:

  • Case Identification: A unique identifier assigned to the case
  • Creation Date and Time: The date and time when the case assignment was created.
  • Initiating Party: Information about the party initiating the case
  • Case Assignee: Information about the party to whom the case is assigned
  • Case Type: Indicates the type or category of the case (e.g., fraud investigation, customer complaint, transaction discrepancy).
  • Case Priority: Specifies the priority level assigned to the case
  • Case Subject: Provides a brief description of the case subject.
  • Case Description: Offers a more detailed description of the case.
  • Related Parties: Information about any parties involved with the case, such as the affected customer or counterparty.
  • Case Status: Indicates the current status of the case (e.g., opened, in progress, resolved)

        <Assgnmt>
            <Id>NegativeResponsetoaRecall</Id>
            <Assgnr>
                <Agt>
                    <FinInstnId>
                        <BIC>BTRLRO22</BIC>
                    </FinInstnId>
                </Agt>
            </Assgnr>
            <Assgne>
                <Agt>
                    <FinInstnId>
                        <BIC>INGBROBUXXX</BIC>
                    </FinInstnId>
                </Agt>
            </Assgne>
            <CreDtTm>2019-11-28T12:27:39</CreDtTm>
        </Assgnmt>

UnderlyingTransaction

Specifies the details of the underlying transactions being cancelled. It contains the following elements:

  • Case Identification: The unique identifier of the original case that is being cancelled or reversed.
  • Cancellation Reason: An explanation for the cancellation or reversal of the case assignment.
  • Cancellation Date and Time: The date and time when the cancellation of the case assignment took place.
  • Initiating Party: Information about the party initiating the cancellation or reversal
        <CxlDtls>
            <TxInfAndSts>
                <CxlStsId>NegativeResponsetoaRecall</CxlStsId>
                <OrgnlGrpInf>
                    <OrgnlMsgId>ORIGINAL PACS.008</OrgnlMsgId>
                    <OrgnlMsgNmId>pacs.008.001.02</OrgnlMsgNmId>
                </OrgnlGrpInf>
                <OrgnlInstrId>SCTORD156820191128000000000023</OrgnlInstrId>
                <OrgnlEndToEndId>NOTPROVIDED</OrgnlEndToEndId>
                <OrgnlTxId>107</OrgnlTxId>
                <TxCxlSts>RJCR</TxCxlSts>
                <CxlStsRsnInf>
                    <Orgtr>
                        <Id>
                            <OrgId>
                                <BICOrBEI>BTRLRO22</BICOrBEI>
                            </OrgId>
                        </Id>
                    </Orgtr>
                    <Rsn>
                        <Cd>AGNT</Cd>
                    </Rsn>
                </CxlStsRsnInf>
                <OrgnlTxRef>
                    <IntrBkSttlmAmt Ccy="EUR">30</IntrBkSttlmAmt>
                    <IntrBkSttlmDt>2019-11-28</IntrBkSttlmDt>
                    <SttlmInf>
                        <SttlmMtd>CLRG</SttlmMtd>
                        <ClrSys>
                            <Prtry>ST2</Prtry>
                        </ClrSys>
                    </SttlmInf>
                    <PmtTpInf>
                        <SvcLvl>
                            <Cd>SEPA</Cd>
                        </SvcLvl>
                    </PmtTpInf>
                    <RmtInf>
                        <Ustrd>test</Ustrd>
                    </RmtInf>
                    <Dbtr>
                        <Nm>John Doe</Nm>
                    </Dbtr>
                    <DbtrAcct>
                        <Id>
                            <IBAN>RO83BTRLY3TSFANS83CS8NHG</IBAN>
                        </Id>
                    </DbtrAcct>
                    <DbtrAgt>
                        <FinInstnId>
                            <BIC>BTRLRO22</BIC>
                        </FinInstnId>
                    </DbtrAgt>
                    <CdtrAgt>
                        <FinInstnId>
                            <BIC>INGBROBUXXX</BIC>
                        </FinInstnId>
                    </CdtrAgt>
                    <Cdtr>
                        <Nm>Bruno</Nm>
                    </Cdtr>
                    <CdtrAcct>
                        <Id>
                            <IBAN>RO41INGBIJEHFMQA3Y4VY19V</IBAN>
                        </Id>
                    </CdtrAcct>
                </OrgnlTxRef>
            </TxInfAndSts>
        </CxlDtls>

Camt.052 Message

Overview

The ISO 20022 camt.052 message is a bank to customer account report.

It is used to provide intraday account reports to customers. Both transactions and balances are provided in the camt.052. Intraday transactions are transactions that were booked on an account since the last book day closed. It may contain reports for more than one account.

The XML Schema and Message Definition Report for camt.052 can be downloaded from here.

camt.052

Building Blocks of Camt.052

GroupHeader

Contain all the common characteristics of all reports contained within the camt.052. It will contain the following elements:

  • Message Identification: A unique identifier assigned to the message
  • Creation Date and Time: The date and time when the message was created.
  • Number of Cases: The total count of individual cases or assignments included in the message.
  • Initiating Party: Information about the party initiating the message

Report

The Camt.052 will contain a number of reports. It will contain the following elements:

  • Report Identification: A unique identifier assigned to the report
  • Creation Date and Time: The date and time when the report was created.
  • Initiating Party: Information about the party initiating the report.
  • Cases: This section contains details about the individual cases or assignments being reported. Each case may include information such as the case identification, case type, case subject, case status, and other relevant details specific to the reported cases.
<?xml version="1.0" encoding="UTF-8" standalone="yes"?>
<Document xmlns:ns3="urn:iso:std:iso:20022:tech:xsd:camt.052.001.06">
    <BkToCstmrAcctRpt>
        <GrpHdr>
            <MsgId>0SFpm6pX85QG6zuVSpwW2buz92cZO5UjJlQ</MsgId>
            <CreDtTm>2020-06-27T05:45:12.099Z</CreDtTm>
        </GrpHdr>
        <Rpt>
            <Id>XowRd492aANA110aIfDcUBgf43VEsQlyOEg</Id>
            <CreDtTm>2020-06-27T05:45:12.100Z</CreDtTm>
            <FrToDt>
                <FrDtTm>2020-06-26T04:00:00.000Z</FrDtTm>
                <ToDtTm>2020-06-27T04:00:00.000Z</ToDtTm>
            </FrToDt>
            <Acct>
                <Id>
                    <Othr>
                        <Id>001-29712-1004728</Id>
                    </Othr>
                </Id>
                <Ownr>
                    <Nm> TEST ISO_1 etransfer</Nm>
                    <PstlAdr/>
                    <Id>
                        <OrgId>
                            <Othr>
                                <Id>00000001BISO01</Id>
                                <SchmeNm>
                                    <Cd>CUST</Cd>
                                </SchmeNm>
                            </Othr>
                        </OrgId>
                    </Id>
                </Ownr>
                <Svcr>
                    <FinInstnId>
                        <ClrSysMmbId>
                            <MmbId>CA000001</MmbId>
                        </ClrSysMmbId>
                    </FinInstnId>
                </Svcr>
            </Acct>
            <TxsSummry>
                <TtlNtriesPerBkTxCd>
                    <NbOfNtries>0</NbOfNtries>
                    <Sum>0.00</Sum>
                    <BkTxCd>
                        <Prtry>
                            <Cd>COMPLETED</Cd>
                        </Prtry>
                    </BkTxCd>
                </TtlNtriesPerBkTxCd>
                <TtlNtriesPerBkTxCd>
                    <NbOfNtries>9</NbOfNtries>
                    <Sum>0.42</Sum>
                    <BkTxCd>
                        <Prtry>
                            <Cd>CANCELLED</Cd>
                        </Prtry>
                    </BkTxCd>
                </TtlNtriesPerBkTxCd>
            </TxsSummry>
            <Ntry>
                <Amt Ccy="CAD">0.02</Amt>
                <CdtDbtInd>CRDT</CdtDbtInd>
                <Sts>INFO</Sts>
                <BkTxCd>
                    <Prtry>
                        <Cd>CANCELLED</Cd>
                    </Prtry>
                </BkTxCd>
                <AmtDtls>
                    <InstdAmt>
                        <Amt Ccy="CAD">0.02</Amt>
                    </InstdAmt>
                    <TxAmt>
                        <Amt Ccy="CAD">0.02</Amt>
                    </TxAmt>
                </AmtDtls>
                <NtryDtls>
                    <TxDtls>
                        <Refs>
                            <MsgId>BISO0120061100104</MsgId>
                            <InstrId>BISO0120061100104000001</InstrId>
                            <EndToEndId>BISO0120061100104000001</EndToEndId>
                            <ClrSysRef>CA1MRkX7rFRW</ClrSysRef>
                        </Refs>
                        <Amt Ccy="CAD">0.02</Amt>
                        <CdtDbtInd>CRDT</CdtDbtInd>
                        <RltdDts>
                            <TxDtTm>2020-06-26T17:30:00.603Z</TxDtTm>
                        </RltdDts>
                        <SplmtryData>
                            <Envlp>
                                <BulkReqPmtFnlzRptRecSplmtryData>
                                    <CnclRsn>3</CnclRsn>
                                </BulkReqPmtFnlzRptRecSplmtryData>
                            </Envlp>
                        </SplmtryData>
                    </TxDtls>
                </NtryDtls>
            </Ntry>
        </Rpt>
    </BkToCstmrAcctRpt>
</Document>

Camt.053 Message

The originator bank issues the ISO 20022 camt.053 message to the originator.. It shows all of the transactions against the originator’s bank account on a given day.

In addition to debits/credits, the camt.053 will contain an opening and closing balance. It is also known as BankToCustomerAccountReport

You can find the definition of the CAMT.053, along with its message definition report, here

Building blocks of Camt.053

GroupHeader – this element is mandatory and contains the msg identifier and date and time the camt.053 was created.

Camt.053 GroupHeader

The GroupHeader contains the following elements:

  • Message Identification – unique identifier of the message
  • Creation Date and Time – creation date and time of the message
  • Number of Transactions – total number of individual transactions
  • Control Sum – sum of control amounts of all the transactions
  • Authorisation – indicates authorisation status of the message
  • From – indicate the financial institution which sent the account statement
  • To – indicate the customer receiving the account statement.

Statement(s) – The statement is a repetitive element and represents each bank account for which a statement is provided. Each statement will contain a balance and entries.

Camt.053 stmt

The statement(s) will contain the following elements:

  • Statement Identification – unique identifier for the message
  • Start/End Date and Time – indicates the duration in which the statement applies.
  • Frequency – indicates the frequency of the statement.
  • Update Type – indicates the purpose of the statement
  • Supplementary Data – indicates any additonal data provided
  • EntryDetails – Provides information about individual transactions in the statement

Camt.054 Message

The ISO 20022 Camt.054 is a notification message sent by the originator bank to the originator informing them of a credit(s) or debit(s) against their account. It does not contain balance information.

Even though, the Camt.054 is part of the ISO20022 standard, it is optional. A bank can choose whether to send it or not.

The definition of the Camt.054, along with its message definition reports, can be found here.

Building blocks of Camt.054

Camt.054 contains two blocks:

Group Header

Contains identifying information for all of the debits/credits in the message. The Group Header may also contain:

  • message id – used to identify each message.
  • creation date and time – indicates when the payments(s) referenced were created.
  • number of transactions – count of the number of transactions in the message
  • control sum – contains a sum of the total number of transactions in the message
  • initiating party – contains information on the party who initiated the payment.

Ntfctn

Contains information about the transactions in the message. The ntfctn may also contain:

  • Notification Message Identification – contains a unique id used to identify each notification in the message
  • Notification Date – notification creation date.
  • Additional Notification Information – used to provide additional information about the notification.
  • Notification Message Name Identification – code indicating the category of notification message.
Camt.054 message

Camt.056 Message

The originating bank sends the camt.056 message to the beneficiary bank to cancel a credit transfer.

You can find the definition of the camt.056 schema and its message definition report here

One of the most common reasons for issuing a camt.056 is a duplicate payment.

Camt.056 Message

The camt.056 requires a response from the beneficiary bank within 15 working days.

This response can be:

  1. Positive response to the recall. In this case a pacs.004 is sent by the beneficiary to the originator and the money is credited to the originator
  2. Negative response to the recall. In this case a camt.029 is sent to the debtor bank. In this case stays with the beneficiary.

Building blocks of Camt.056

The Camt.056 will contain the following elements:

  • Message Identification: A unique identifier assigned to the message.
  • Related Reference: Reference to a related message or transaction.
  • Payment Instruction Details: Details about the payment instruction being transmitted.
  • Payment Transaction Information: Information about individual payment transactions, including amounts, dates, and parties involved.
  • Settlement Details: Information related to the settlement of the payment, such as clearing and settlement system details.
  • Remittance Information: Information about the remittance advice or additional payment details.
  • Regulatory Reporting Information: Information required for regulatory reporting purposes.
  • Additional Information: Any additional relevant information associated with the payment message.
  • Supplementary Data: Optional additional data included with the message.

Who are Nacha?

Nacha logo

Nacha govern the ACH (Automated Clearing House) payments network in United States. It stands for National Automated Clearing House Association.

It also manages the Operating Rules for ACH Payments. These define the rules and responsibility of any participants using the ACH network. However, the ACH operators, Federal Reserve, and the Electronic Payment Network run the ACH network, not Nacha.

Some of Nacha’s responsibilities are:

  • Promote the ACH network
  • Enforcing the rules governing the ACH network
  • Steering the evolution of the ACH network in the evolving payments world

What are the Nacha operating rules?

Each participant of the ACH network must adhere to rules if it wants to accept ACH payments. These rules are broad and participants of the ACH network need to stay up to date to ensure compliance. Participants can be fined or removed from the ACH network in the event of non-compliance. You can obtain a copy of the rules here.

Examples of Nacha operating rules

The following are examples of Nacha operating rules around ACH direct debit

  • Ensure customer information such as bank account numbers, social security numbers, billing addresses are secure.
  • Customers must clearly authorise any ACH direct debits.
  • Any change to amount of the ACH direct debits needs to be communicted clearly to the customer
  • Cancelled ACH direct debits need to be completed in a timely manner.

What is Nacha file format?

A Nacha file is a set of ACH instructions used to initiate a payment over the ACH network. A record (line) in a Nacha file must be 94 characters in length.

Fields that begin and end at certain positions make up each record. These fields contains important information such as account number and routing number. Additionally each record must follow a certain order.

Nacha file format

Although banks mostly use Nacha files for payment initiation, they can also use the file format for a wide variety of other purposes such as reversals or returns.

What is the ACH Network?

The ACH (automated clearing house) network is a payments network in the United States used to process low-value domestic payments. Two different operators run the ACH network:

  • Electronic Payment Network (EPN). Run by the Clearing House.
  • FedACH. Run by the Federal Reserve Banks.

The National Automated Clearing House Association (Nacha) govern the ACH network.

Approximately 11,000 financial institution use the ACH network in the United States.

What is an ACH Transfer?

An ACH transfer sends electronic funds over the ACH network. There are two types of ACH transfers:

  • ACH Debits – Initiated by a payer to send funds directly to a receiving account. e.g. employee salaries
  • ACH Credits – Initiated by a recipient to request funds, e.g. bills.

ACH transfers are batched, cheap and can be reversed.

How does ACH work?

The ACH operators will batch these transfers according to the Receiving Depository Financial Institutions (RDFI) receiving the transfers. The RDFI receives these transfers at a number of set intervals during the day. An RDFI will debit/credit accounts based on the account and routing numbers.

An ACH transfer can complete in a number of hours or up to two business days depending on the time of the day or whether same day processing has been specified.

ACH Transfer

Examples of ACH Payments

  • Direct deposit from employer to employees
  • Household utility payments
  • Business paying suppliers for products/services
  • Funds transfer from one bank account to another