SWIFT MT103 serial payment analysis 1/3

In a previous article, serial and cover methods were presented. Then we analyzed a concrete example of payment settled with cover method in the following articles:

  1. SWIFT MT103 202 Cover payment analysis – part 1
  2. SWIFT MT103 202 Cover payment analysis – part 2
  3. SWIFT MT103 202 Cover payment analysis – part 3
  4. SWIFT MT910 Confirmation of Credit – Detailed analysis

Now we want to see how the same payment can be settled using the serial method. In the coming series of three articles, we will consider the MT103 serial messages exchanged between the parties and their meaning. On the following figure, you can see the different parties involved and their roles in the first MT103. The second and third MT103 serial will be analyzed in the next articles.

 

MT103 Serial Payment between Debtor Bank and its correspondent

MT103 Serial Payment Message 1 between Debtor Bank and its correspondent

As expected in the serial method, one message is initiated by the sender to settle the funds. That message moves from one party to the next in the payment chain until it reaches the beneficiary bank.

The table below contains the fields that are transported in this first MT103 serial 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.

Narratives and notes on this SWIFT MT103 serial message

As usual, there is more to this SWIFT MT103 serial message than meets the eye. The following narrative and notes allow to get a deeper understanding of the message content.

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

The Sender (BNPAFRPP) is instructing the Receiver (PNBPUS3N) to debit its account and credit the intermediary institution (IRVTUS3N) account.

Narrative and note 2 (Fields 53a and 54a are not in the SWIFT MT103 serial message)

Fields 53A and 54A (Sender’s and receiver’s correspondents) are not present. This means payment does not go through correspondents. So BNPAFRPP has an account with PNBPUS3N. The intermediary institution IRVTUS3N (56A) is the next party in the chain. It will receive the funds from PNBPUS3N, the receiver of this message. BSCHESMM (57A) will receive the funds from the intermediary institution IRVTUS3N (56A), for credit to the beneficiary’s account. IRVTUS3N is US correspondent of BSCHESMM.

Narrative and note 3 (Ordering and account with institution in the SWIFT MT103 serial message)

There is no ordering institution (52A) in the message. That means the ordering customer is customer of the Sender, BNPP.

An account with institution (57A) is present in the message, i.e. the Beneficiary customer account (:59:/ES6300491800132710387658) is not held by the receiver (PNBPUS3N) of this message, but by the account with institution.

Narrative and note 4 (Details of charges in the SWIFT MT103 serial message)

Details of charges (71A) is SHA. The charges are shared between Ordering and Beneficiary customer. Sender pays charges to ordering bank. Beneficiary pays to receiving and other intermediary banks. Note that the Ordering bank may have taken charges, but they do not appear in the MT103 Message.

This ends our analysis of the first MT103 serial message. In the next article, we will consider the second MT103 message exchanged  between Wells Fargo and Bank of New York Mellon.

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4 Responses to SWIFT MT103 serial payment analysis 1/3

  1. Jules February 9, 2019 at 6:20 pm #

    Hello Sir,

    Could you tell me the difference between a correspondent bank and an intermediary bank in the above context?

    • Jean Paul February 11, 2019 at 1:29 pm #

      Hi Jules, Strictly speaking, there is no difference. The intermediary institution (F56) must have an account relationship with the beneficiary bank. Otherwise the money could not flow through F56. However, in serial payments, the correspondent of the beneficiary bank would be provided in F56, while in the announcement (cover payments), it would be provided in the F54. Let me know if you have further questions.

  2. Stuti March 16, 2019 at 3:09 pm #

    Hi Jean,

    Could you please clarify the below –

    As per your note 2-
    ”Fields 53A and 54A (Sender’s and receiver’s correspondents) are not present. This means payment does not go through correspondents. So BNPAFRPP has an account with PNBPUS3N”.

    I have gone through your article on cover payments, where we use both tag 53 and 54 in MT 103 Announcement. I understand there also when we initiate the first 202COV, the sender has an account with the receiver (i.e tag 53 in MT 103 Announcement) and the sender’s account is debited and receiver’s account is credited. therefore, the above statements sounds a little confusing and moreover here you have mentioned that this payment does not go through correspondents. When BNPAFRPP has an account with PNBPUS3N, isn’t is through corresponding banking?

    • Jean Paul March 18, 2019 at 2:57 pm #

      Hi Stuti,

      When I talk about correspondents, I refer to the fields 53 and 54 of the SWIFT message. When BNPAFRPP has an account with PNBPUS3N, the account relationship is through corresponding banking of course.
      But in the SWIFT message, PNBPUS3N is the receiver and it can immediately debit the account of BNP PARIBAS and forwards it to the next party. No need to wait for the money to come through a correspondent.
      And that is why F53 and F54 are not present. I hope this clarifies. Please let me know if things are not clear.

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