Introduction -

The Clean Payments module automates single international payment as covered by several payment clearing channels. Most common are Swift payments via SWIFT MT 103 and MT 202 messages. Additionally, TARGET2 is another supported clearing channel for outgoing payments.

A bank remits funds on behalf of an ordering customer or institution or on its own account to the account of a beneficiary at his bank. Such remittance is represented by payment messages that carry the instruction to the receiver bank to credit a specified owners account with funds debited from the senders account (serviced by the receiving bank) or from the account of another specified bank. When the receiver of the payment message is requested to debit another banks account, this other bank should receive a cover payment message that instructs it to debit the senders account with them in favor of the receiver of the original payment message. In fact there may be a chain of cover payment messages.

Example - SWIFT:

• The payment message is an MT 103 (Single Customer Credit Transfer) in case the ordering party or beneficiary is a customer or corporate (non-bank).
• It is an MT 202 (General Financial Institution Transfer) when all parties in the payment are banks/financial institutions.
• In Swift cover message are always MT 202 or MT 202COV (as cover payment of an MT 103).

When there is no direct account relationship between the originating bank and the beneficiary's bank, payments are either made via cover payments as described above or alternatively as a string of payments between banks with account relationships with each other. A payment message is then sent to a bank that services an account for the sender, requesting them to remit funds to one of their account relationships, who should be requested to remit the same funds to one of their account relationships, etc., until the final bank is the beneficiary's bank.

Provisions in the customer payment message and the bank-to-bank payment messages allow specifying several banks through which a payment has to be made. The bank processing the payment (i.e. using this module) is always a link in the chain, debiting one account and crediting another (and charging fees).

Outgoing Payments - Payments, which we initiate, i.e. on request of our customer (or internal department).

Display a Clean Payment - Transaction CPTSEL, This transaction is used display a clean payment with

• To Do List for selected Contract.
• Connected Contracts.
• Contract Overview.
• Transaction History for selected Contract.

Amounts / Liabilities - Amount handling is very simple in this business sector since it deals with one off payments. The money is remitted as soon as possible after receipt of the instruction and then there is normally nothing more to be done. So no need for liabilities.

When we are a bank in the payment chain, we may receive an amount less that the payment instruction amount, because the previous bank(s) in the chain may have deducted their fees. We need to use this Received amount to forward to the Beneficiary (or next Paying bank) and may have to deduct our own fees. The original payment instruction amount remains unchanged and needs to be specified in the payment message along with the actually settled amount.