PAYMENTS SYSTEM- #4

SEPA PAYMENTS & MESSAGES

WAQUAR AHMAD
SEPA – Single Euro Payment Area
IBAN - International Bank Account Number

The unique identifier for the bank account in SEPA payments. It was originally developed to facilitate
payments within the European Union but the format is flexible enough to be applied globally. IBAN is used to
identify an account internationally. An IBAN is unique in the whole word. The length of the IBAN is variable
depending on the country, but it is fixed in a single country. The IBAN is used to facilitate automated
processing of cross-border payments and therefore to increase the speed and quality of processing.

The IBAN structure consists of maximum 34 characters

And the BBAN limit is 30
Schemes of SEPA

SCT - The SEPA Credit Transfer is a push payment initiated by the originator (payer or debtor) who instructs
his bank to transfer funds from his own account to the beneficiary’s account (payee).

DD - A SEPA Direct Debit is a pull payment initiated by the Creditor (the payee) to collect funds from the
debtor’s account (the payer). The debtor signs an electronic or paper mandate to pre-authorise the creditor to
send direct debit instructions (collections).
Four corner model
When we look at the naming of the messages exchanged in SEPA, we see that they all begin with four letters:
These four letters are inherited from the ISO20022 standard:

PAIN and CAMT in the Customer-to-Bank space

PACS and CAMT in the Interbank space

PAIN stands for PAyment INitiation: Pain messages are used by originators to send instructions to the bank and
received status report about their execution from the Bank. They are used exclusively in the C2B space.

CAMT stands for CAsh ManagemenT: In the C2B space, Camt messages are used to inform the customer about
his cash situation as a result of the execution of instructions or reception of payments. Customers can also send
camt messages to cancel orders or transactions. In the Interbank space, Camt messages are used to cancel orders
or transactions as well, but in addition to reply to cancellation requests.

PACS stands for PAyment Clearing & Settlement: Pacs messages are used to transfer money from one financial
institution to another financial institution. They are used exclusively in the Interbank space.
Anatomy of SEPA message name

The four letters and the three digits after Pacs, Camt or Pain identify a specific message

The last five digits identify the versioning of the messages.

Pain.001.001.03 means version 1.3 (001.03) of the pain.001 message. When a new version of the message is
published, only the last digit is increased. 
Type of PAIN messages
Message Name Message ID
Customer Credit Transfer Initiation Pain.001.001.09
Customer Payment Status Report Pain.002.001.09
Customer Payment Reversal Pain.007.001.09
Customer Direct Debit Initiation Pain.008.001.09

Type of PACS messages

Message Name Message ID

FI to FI Payment Status Report Pacs.002.001.09
FI to FI Customer Direct Debit Pacs.003.001.08
Payment Return Pacs.004.001.09
FI to FI payment Reversal Pacs.007.001.09
FI to FI Customer Credit transfer Pacs.008.001.09
SEPA Credit Transfer Messages Flow
SEPA Direct Debit Messages Flow
Type of CAMT messages

Message Name Message ID

A/C Reporting camt.052.001.09
A/C Statement camt.053.001.09
Notification of Debit/Credit camt.054.001.09
Payment Cancellation Request (C2B) camt.055.001.09

Payment Cancellation Request (I2B) camt.056.001.09

SEPA Credit Transfer Messages Flow
 Recall
4 strategies to understand a cross border payment

Strategy #1 - The open loop model & CSM

Strategy #2 - Correspondent Banking & account relationships between banks

located in different currency zones

Strategy #3 – Swift network & standards

Strategy #4 – 4 corner model & SEPA messages

THANK YOU !!!!