SWIFT MT103 202 Cover payment analysis – part 1

The introduction and analysis of SWIFT cover and serial payments in a previous article provided us with a good foundation to move further. We can now consider concrete examples of SWIFT MT103 202 cover payments, see which parties are involved and the content of the messages that they exchange.

In this article, we will perform a detailed analysis of a MT103 announcement sent by the debtor bank to the creditor bank. Let’s first look at the picture depicting the messages and the different parties.


Image of MT103 202 analysis - MT103 announcement

MT103 202 analysis – MT103 announcement

On the picture, Input and output messages are highlighted to make you aware that the message sent is not received as is by the receiver. The output messages that SWIFT sends to the receiver, have slighty different formats (See block 1 and block 2 definitions) than input messages.

What you see on the picture is a payment that a company in France, customer of BNP Paribas in Paris, wants to send to another company in Spain, customer of Banco Santander in Madrid. The payment is in USD currency. Since BNP Paribas and Santander are not located in the USD currency zones, the funds transfer happens through their correspondent accounts opened with Banks in the USA. In this example, we assume that the correspondent of BNP Paribas is Wells Fargo and the correspondent of Santander is Bank of New York Mellon. In any case, BNP Paribas sends a combination of SWIFT MT103 202 Cover messages for the transfer.

Major Banks in general create subsidiaries in other currency zones that they use as correspondents. Santander for instance would use Santander New York instead of Bank of New York as correspondent.

The table below contains the fields that are transported in the MT103 announcement message. An additional column (comments) provides further explanation, so that it is easy to understand each field and what it is used for.

Read this page on the SWIFT formatting rules and Character sets of MT Messages to get additional information and understand what 16x, 4!c and the format of the field options mean.

The first message in the combination (of SWIFT MT103 202 Cover) that is analyzed in detail below is the MT103 announcement.

Narratives and notes on this SWIFT MT103 announcement message

As usual, there is a lot to say about this SWIFT MT103 announcement message. The following narratives and notes allow to get a deeper understanding of the message content.

Narrative and note 1 (Main purpose of this SWIFT MT103 announcement)

The Sender (BNPAFRPP) is informing / announcing to the Receiver (BSCHESMM) that funds are coming for a specific customer. The funds will be credited on receiver’s USD account  with its correspondent IRVTUS3N.

Narrative and note 2 (Presence of fields 53a and 54a in this SWIFT MT103 announcement)

The presence of the Tags 53A and 54A indicate that there is no account relationship in USD, the currency of the transaction, between sender and receiver.

Field 53A indicates the Bank which is to provide the funds to the Receiver on behalf of the Sender.

Field 54A is the receiver’s correspondent, the Bank that will receive the funds on behalf of the Receiver.

Sender’s correspondent bank do not have account relationship in USD with the Receiver (BSCHESMM), therefore, Receiver’s correspondent bank must be added to the chain (54A:IRVTUS3N).

Narrative and note 3 (Absence of fields 52a and 57a in this SWIFT MT103 Announcement)

There is no ordering institution (52A) in the message. So the ordering customer is customer of the Sender.

There is no account with institution (57A). It means that the Beneficiary customer account (:59:/ES6300491800132710387658) is hold by the receiver.

Narrative and note 4 (The charges)

Details of charges (Tag 71A) is SHA. The charges are shared between Ordering and beneficiary customer. Sender pays charges to ordering bank. Beneficiary pays charges to receiving and other intermediary banks.


This ends our analysis of the MT103 Announcement. We made an important step. But that is just one message in the combination of SWIFT MT103 202 Cover. You certainly want to look at and analyze the MT202 COV mesage as well. That will be the subject of the next article.

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12 Responses to SWIFT MT103 202 Cover payment analysis – part 1

  1. James November 29, 2018 at 9:26 am #

    Thanks for your articles, I find them very well explained.

    Iā€™m working on a project related to SWIFT messages and I have a few questions:
    1. In this example, who is deciding which correspondents to use? E.g. how did BNP knows that Santander has a correspondent in US? And is it the case that there are maximum 2 correspondents in the chain of payment?
    2. Are there any way to determine whether a MT103 message is an cover announcement or serial message based on some fields?

    Any reply is appreciated, thanks in advance!

    Best Regards,

    • Jean Paul November 29, 2018 at 12:09 pm #

      Hi James,

      Thanks for your interest. Your questions are interesting. šŸ™‚
      1. Routing in Xborder payments is pretty complex. I will just give you a hint here.
      It is called Standing Settlement Instructions. Banks do share information about their correspondents in specific messages (MT670 and MT671).
      Information extracted from those messages are stored in payments engines and use among other for routing.
      Check the SWIFT documentation about these MT670 and MT671. It can help.

      2. The answer is unfortunately no. One principle for cover and announcement in Europe is: When the bank have direct relationship with the receiving bank, a serail payment is used. If not, it is a cover payment. It is by processing the payment that you find out where the funds should come from and then deduct if it is a cover or a serial. Read the article about serial and cover payments if not done yet.

      I hope this helps.

      Br, Jean Paul

      • shadab December 6, 2018 at 12:33 pm #

        Hi Jean,

        You mentioned “When the bank have direct relationship with the receiving bank, a serial payment is used. If not, it is a cover payment”.

        In this statement, are you referring to BNPAFRPP (sender) and BSCHESMM (receiver)?

        If No, then which banks are you referring?

        If yes, then the question is, even this payment scenario you showed is also possible serially as well as you showed in serial part 1/2/3.. In this case, what is the key factor which determines whether to go for cover or serial?

        I hope I was able to put my thoughts clearly to you. Appreciate your response.

        • Jean Paul December 7, 2018 at 9:59 am #

          Hi Shadab,

          Yes I am referring to BNPAFRPP (sender) and BSCHESMM (receiver).
          If they have an account relationship in the currency of the transaction, no need to go through a correspondent.
          BNPAFRPP can just ask BSCHESMM to debit its account and credit the final beneficiary account.
          But since in this example they do not have an account relationship, they need intermediary to settle the transaction.

          Now when you do not have an account relationship with the receiver, you still need to choose between serial and cover method.
          What will determine the choice? Agreement with beneficiary bank, practices in your region, …
          In the USA for example, Serial method is the standard. But in Europe it is the cover method.
          There are many paramters to take into account.

          I hope it clarifies a bit.
          BR, Jean Paul

  2. James November 29, 2018 at 2:06 pm #

    Hi Jean,

    Thanks for your reply. So I suppose the whole route from the ordering FI to beneficiary FI is determined by looking up sort of a directory? And the maximum number of correspondent banks is then 2? or there can be more?


    • Jean Paul November 29, 2018 at 4:16 pm #

      You are right on both questions. šŸ™‚
      Directories are used to determine the route.
      As far as I remember (not 100% sure so someone can comment on this): in SWIFT messages, you can have one intermediary for serial payments and up to two for cover payments.
      However (this is my experience), there are cases where more than 2 intermediaries are determined after applying the routing algorithm.
      The transaction then goes to repair and someone fixs it manually so that it becomes compliant.
      I hope this helps.

      Jean Paul

  3. Elspeth December 11, 2018 at 12:33 pm #

    Hi Jean

    This is a really helpful article, although I am still rather confused.
    I actually have a few questions with regard to fund redemption. Say for example a client is based in Hong Kong and invested into two USD money market funds (offshore), with two different fund managers and they wanted to place a redemption trade on both funds. They place a redemption order at 12.05pm HKT (on their Bank A cash account),
    1) would this trigger an MT103 to the funds directly? how would that work diagrammatically?
    2) does the FED need to be open in order for the MT202 to be issued by the correspondent bank
    3) is there any way that the correspondent bank of one of the fund managers would be able to process the MT202 quicker than the other or before the FED open (i.e. an early batch run processing for Asia time) to make sure that funds get credited same day in Hong Kong?
    4) under what scenario would a bank credit a clients account immediately based on the MT103 rather than awaiting the MT202?
    5) How would a transfer agent factor in all of this?

    Sorry thats a lot of questions! I hope it makes sense, as I’m quite baffled!

    • Jean Paul December 12, 2018 at 9:46 pm #

      I am not an expert in fund redemption. The article is about transfer of funds between banks through the correspondent banking network.
      Let me try to answer your questions.
      1) To transfer the funds, an payment order must be executed. I can’t tell you when it is triggered. The process might require other conditions to be fulfilled.
      2) The answer here is clearly no. There are 2 possibiliites here: Either a MT202 is issued and sent to the next bank (sending bank has an account relationship with receiving banks) or a payment message is exchanged through a local clearing system and settled in Fedwire.
      3) I would say it depends on when the order is received. Usually the bank that executes the order indicates by when the order should reach the bank and how long it needs to credit the beneficiary account.
      4) Trust. The bank knows the customer and the correspondent particularly if they have been in business for long. He can credit the customer before the funds arrive.
      5) If a transfer agent comes in, he will probably receive the funds before giving them to the ultimate beneficiary and take a commission.

      I hope this helps.

  4. Swapnil December 17, 2018 at 2:25 pm #

    Jean thanks a lot for the articles.Very well explained.

    Can you please help me to understand the concept of F52.

    1. When will F52 come in picture & when it wil not?

    Explanation with a example will really help me to get my concepts cleared

    • Jean Paul December 17, 2018 at 3:29 pm #


      thanks for your appreciation. It is pretty simple to understand when F52 is present. Here is what you read in the SWIFT standards about F52: This field specifies the financial institution of the ordering customer, when different from the Sender, even if field 50a contains an IBAN. So F52 is populated when the sender of the message is not the ordering customer Bank. When F52 is not in the message, it means that the sender is also the bank of the ordering customer. I hope this helps.

      • Khaled February 25, 2019 at 11:14 am #

        Hi Jean,
        I need to talk to you personally through email urgently

  5. ionel Rusen February 27, 2019 at 10:35 am #

    Dear Sir,

    I have a customer who made me a 103dowload payment, I have copies of SWIFT 799/103/202, but this money never got me on my company account, and he is telling me that a bank officer needs to download the funds, I do not know what to do my bank says that the money does not see them in the SWIFT system, HOW CAN I CHECK AND WHAT I SHOULD DO.

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