Payment Glossary:

What is Merchant Account –

merchant accounts are bank accounts that allow your business to accept card payments from
customers.

A merchant account is a type of bank account that allows businesses to accept payments by debit or
credit cards. So a merchant account is an agreement between a retailer, a merchant bank and payment
processor for the settlement of credit card and/or debit card transactions.

When a customer pays for a product or service with a credit card, the funds are first deposited into the
merchant account and from there eventually transferred to the business bank account. 

PROCESSING PAYMENTS: FROM CARDHOLDER TO ACQUIRER

1. Cardholder: Makes a request for a purchase from the merchant, enters and authorizes cardholder
information to initiate the transaction
2. Payment Gateway: Forwards transaction information directly from cardholder’s web browser to
payment processor
3. Processor: Serves as a facilitator on behalf of the acquirer, forwards transaction information from
the payment gateway to the card network
4. Card Network: Routes the transaction information to the correct issuing bank in order to receive the
bank’s authorization
5. Issuer: Receives and verifies the transaction information; if the credit or debit is available, the issuer
sends an authorization code for the transaction back to the card network
6. Card Network: Receives the authorization approval from the issuing bank, then forwards the
authorization to the processor
7. Processor: Receives the issuer’s authorization approval from the card network, then forwards that
information to the payment gateway
8. Payment Gateway: Receives the issuer’s authorization approval from the processor, forwards it to
the merchant to complete the transaction
9. Merchant: Receives the authorization, fulfills the order, and batches the transaction information
along with the rest of the day’s sales
10. Acquirer: Receives the batched transactions at the end of the day, then deposits an amount into the
merchant’s account equal to the total of the batch, minus applicable fees

Fees

Merchant accounts can have a variety of fees attached to them, not all of which are always clearly
outlined in contracts, including:

 Application Fees
 Setup Fees
 Monthly Fees
 Discount Rate
  Per-Transaction Fees
 Cross-border Fees
 Rental fees for a credit card terminal

An internet merchant account is a merchant account specifically designed to hold the proceeds from
the online payment processing of credit cards.

Why Do We Need Merchant Account -

A more precise merchant account definition is a bank account that fronts your business the majority of
the proceeds from credit card payments you accept before your customers pay off their card issuers.

Because there will be a delay between the moment your customer pays for your good or service with a
credit card and the moment they pay their credit card bills, you would have to wait for the proceeds
from the transaction without a merchant account. But if you have a merchant account, it will front your
business the money, minus fees, from card transactions, so that you won’t have to wait for your
customers to pay their credit card bills.

Person 2 Person Payment –allow users to send one another money from their mobile devices through a
linked bank account or card. They make splitting bills with friends and family painless. E.g. Google Pay.

How P2P payments work

Say you’re out to dinner with your cousin Charlie and want to split the check. Instead of fumbling
around for bills and coins, Charlie pays using his card. You take out your phone and open your
app of choice, pick Charlie from your contact list, type the amount you want to send and your
PIN (if you have one), and voilà — you’ve paid Charlie back.
Once Charlie receives the money, he can leave it in his P2P account for the next time it’s his
turn to pay, or he can transfer it to his bank account.
Different services may have different steps or requirements, but most work something like this.

HOW DOES THE P2M SERVICE WORK?

There are two ways in which P2M transactions can be performed: customer initiated transactions (P2M
PUSH) and merchant initiated transactions (P2M PULL). P2M push transactions can be used for paying
insurance premium, mobile /DTH recharge, credit card fee, utility bills, over-the-counter payments, and
face-to-face payments such as pizza delivery, couriers and cabs.

For P2M PUSH, a customer initiates transaction through the mobile banking app or SMS facility provided
by the bank. For P2M PULL, the transaction is initiated through the website of the merchant. Plus you
need to get a one-time password (OTP) from your bank.
HOW TO SEND OR RECEIVE FUNDS FOR P2P TRANSACTIONS?

To send money, initiate an IMPS transaction using the mobile app or SMS. You need to enter the
beneficiary’s mobile number and MMID, amount and M-PIN for initiating a transaction. You will then
receive a confirmation SMS for the transaction. To receive money, share your mobile number and MMID
with the sender. The sender then initiates the above-mentioned steps. And you get an SMS confirmation
for the money received.

What is an Acquiring bank?

The primary purpose of an acquiring bank (also known as a merchant acquirer, or simply as an acquirer)
is to facilitate payment card transactions on behalf of merchants.

In order to accept credit and debit card transactions, a merchant will need to contract with an acquirer
to receive funds from the cardholder’s issuing bank.

The only alternate option would be to process payments through a wallet, like PayPal, Apple Pay, or
Android Pay.

The acquirer will typically hold a portion of the merchant’s funds in a merchant account reserve—a
separate account held by the acquirer as a kind of security deposit. This way, acquirers protect
themselves against loss in the event that a merchant experiences excessive chargebacks. (Usually,
Chargeback occurs due to merchnat, why would acquing bank bear the loss, hence they keep deposit in
advance incase there is any chargeback happens.)

As part of the payment processing agreement, the acquirer essentially extends a line of credit to the
merchant until the chargeback time limit has expired.

In the case of a transaction reversal, a refund or a chargeback, they will be the ones responsible for
returning the fund to the issuing bank and the cardholder. 

Chargebacks are an unneeded expense for the acquiring bank, issuing bank and especially, the
merchant. Acquiring banks will charge the merchant steep penalties, as high as $2.40 per $1.00 lost, per
chargeback. If a merchant receives too many chargebacks, the acquiring bank will close that line of
credit, and that merchant will no longer be able to accept credit cards as a payment method.

What is an Issuing Bank

The primary role of an issuing bank (also known simply as an issuer) is to provide payment cards to
consumers on behalf of the card networks. This financial institution acts as a liaison and facilitates the
repayment of transactions to merchants.

Most issuers supply cards branded by Visa or MasterCard. However, American Express and Discover are
both card network and issuer, meaning they supply their own branded cards directly to consumers.

Some financial institutions, such as Bank of America, represent both merchants and cardholders, and
can therefore serve as both an issuer and an acquirer at the same time.
Chargeback process

1. The card holder contacts their issuing bank and requests a chargeback.
2. The issuing bank begins the chargeback procedure and contacts the acquiring bank.
3. The acquiring bank informs the merchant about the chargeback request and asks them to take a
stand in a specific time period (e.g. 7 days).
4. The merchant either accepts the chargeback or objects it and provides documentations that
proves them right.
If the merchant accepts the chargeback, doesn't respond in the said time period or objects the
chargeback, but cannot provide proper documentation, they have to return the funds and pay
the appropriate fees.
5. The acquiring bank informs the issuing bank about the merchant position and provides
approriate documentation (that, for example, proves the merchant is in the right).
6. The issuing bank informs the card holder about the result. If the merchant was in the right, the
funds are not returned.

How Does UPI Work

Sending money on the UPI is called a "push." In order to send money, the user logs into the interface
and selects the Send Money/Payment option. After entering the recipient's virtual ID and the amount
desired, he chooses the account from which the money will be debited. The user then enters a
special personal identification number (PIN) and receives a confirmation. 

Receiving money through the system is called a "pull." Once the user has logged in to the system, she
selects the option to collect money. The user then needs to enter in the virtual ID for the remitter, the
amount to be collected, and the account in which she will deposit the funds. A message then goes to the
payer with the request to pay. If he decides to make the payment, he enters his UPI PIN to authorize the
transaction. Once the transfer has been completed, both the sender and the recipient receive a
confirmation by text message to their smartphones. 

Currently, if you want to make a bank payment online, you have to enter their account number, account
type, Bank name and IFSC code. Even if you have all these details, typing it all in, particularly on a phone,
is a painful process. Most banks take upto 12 hours to add a new payee and only then you can make the
transfer.

The idea behind the UPI is to do away with all of this. The interface will allow account holders across
banks to send and receive money from their smartphones using just their Aadhaar unique identity
number, mobile phone number or virtual payments address without entering bank account details.

According to NPCI, so far only 29 banks have agreed to start this service. If your bank is UPI-enabled, you
can ask it to connect you to the system. To initiate a transaction, you can use two types of address—
global or local. Global address includes your mobile, Aadhaar and bank account numbers. A local
address can be a virtual address. Let’s say your bank gives you a virtual ID similar to your email ID (for
instance, name@companyname). This virtual address will allow you to send and receive money from
multiple banks and prepaid payment issuers.

So, you will no longer need to use a particular app to send and receive money. For example, if you use a
taxi service, at the end of the journey you just have to give your virtual address and the driver will
request money from it. You will get a message on your mobile phone asking for authentication. Once
you authenticate the transaction by entering your password, it will be complete. This process doesn’t
require either the driver or you to share bank details. Since UPI runs on IMPS, the service will be
available real time and 24X7.

Banks are connected using a platform called National Financial Switch. UPI is built on top of this platform
(Not directly but on layers the description if which I omit now). In essence, because of this connectivity it
is possible to transfer money from one account in one bank to another account of another bank
immediately and instantaneously. What I mean by immediate is that you don’t have to wait for a
window of time to happen. For example, NEFT transfers happen only during certain times of the day and
your funds transfer requests will get executed in batches. UPI transfers happen at any time of the day.
By instantaneous, I mean that the funds transfer happens in a few seconds, similar to the money
withdrawal that happens at an ATM. Mind it, for UPI transfers to happen, both the banks have to be
participants of UPI platform. All major banks and most other banks participate in UPI. At the time of
writing this answer there are 44 banks that participate on the UPI platform and 33 of them have
developed apps to be able to use UPI.

Having said that, there is one more innovation that UPI has brought it. It allows users of UPI to create
virtual addresses which look like email addresses. (E.g SANKARCN@SBI). Now, when someone wants to
send you money, he does not need to know your bank account details. He just needs to know your
virtual address. Easy to remember and gives you some privacy as well. How does this work? All the
virtual addresses and their associated real addresses are stored in a central repository of UPI. The banks
can use this address translation to resolve virtual addresses for funds transfers.

There is a facility to request money from a virtual address. This person sees a request on his mobile app,
and he can accept of reject the request.

ACH File: ACH file will be created at below path:

D:\Apps\edselit\export\transmit

Non-Consolidated Setup: Consumer funding file will be generated

Consolidated setup - Client funding and Consumer funding file is

generated                                                    

BMX_BANC_ACH_PAY_C_180710052550 - Client funding file - will have total of card and ach payments
and total of consumer paid fees (convenience fees)
BMX_BANC_ACH_PAY_D_180710052550 - Consumer funding file           - will have ACH (Chec and
savings) payments

Chargeback and Return comes only in C file

Refund comes in both files C and D

ACH messages in the USA (and in many other countries) are transported in flat files.

SEPA Messages are transported in XML files based on the ISO 20022 Standard.

RTGS messages are transported in SWIFT MT Files. In some countries (very limited still),
SWIFT MX files based on the ISO 20022 standard are already in use. There are ongoing
discussions in the USA about the adoption of ISO 20022 message format for the Fedwire
Funds service.

Indian check has – at bottom Serial number, MICR code (transit, On-Us etc.), your account with RBI,
Transaction code (29 (Current A/c), 30 (Savings Bank A/c) and 31 (Cash Credit A/c).

When merchant's bank and card

holder banks is the same i.e. when
Acquiring Bank and Issuing Bank
are same then the transaction is
called as on us transaction

ACH Understanding:
There are two types of ACH payments. ACH debit transactions involve money being “pulled” from your
account. ACH credit transactions let you “push” money to different banks (either your own or to others).
Here are two examples of how they function in the wild.

Direct deposit payroll

Many companies offer direct deposit payroll. They use ACH credit transactions to push money to their
employees’ bank accounts at designated pay periods. (Employees need to provide a checking account
and routing number to set this up).

Recurring bill payments

Consumers who pay a business (say, their insurance provider or mortgage lender) at certain intervals
may choose to sign up for recurring payments. That gives the business the ability to initiate ACH debit
transactions at each billing cycle, pulling the amount owed directly from the customer’s account.
So how do ACH payments work? ( Direct debit - recurring)

Let’s take your automated monthly phone bill payments as an example. When you sign up for autopay
with your phone company, you provide your checking account information (routing and account
number) and sign a recurring payment authorization. Direct debit authorization

Then, when you hit your billing cycle, your phone company’s bank (the ODFI) sends a request to your
bank (the RDFI) to transfer the money owed. The two banks then communicate to ensure that there are
enough funds in your bank account to process the transaction.

If you have sufficient funds, the transaction is processed and the money is routed to your phone
company’s bank account. 

How the ACH Payment Process Works (Direct Deposit- payroll)

1. For an employee to get paid on the ACH network, the employer (fiserv), who is the transaction
originator, send an electronic ACH file to the ODFI. This file contains information pertain to ACH
deposit such as employee name, routing number, amount and account numbers.
2. The ODFI sends their ACH entries in batches, according to their predetermined schedule, to
clearing houese/ ACH operator.
3. The ACH operator combines the information submitted by the banks within each cycle (generally
ACHs have several cycles throughout the day).
4. The ACH Operator sorts through their ACH entries and transmits them to their respective
Receiving Depository Financial Institutions (RDFI). This ACH file will goes to respective banks
(employee’s banks)
5. The RDFI ensures that the right amount of money is deposited in the employee’s bank account.
Example:
6. ACH deposits usually take between one and four business days to settle and appear in the
recipient’s account.

Yes the Indian banks do support ACH and here there are 2 forms called ECS Debit and ECS
Credit.
 
ECS Debit - Many Debits and single credit like utility bills and
ECS Credit - Single Debit and many credits like payment of dividends etc.

ACH retun code:

ACH return
Codes.docx

How ACH works:

X-Bank will deduct money from Bob's account (US$ 100) and credit this money in its own
bank Settlement Account. Think of this settlement account as an SWITCH IOU Account, or
a safekeeping account. 

Y-Bank will take money from its own Settlement Account or Switch IOU Account,
and credit the money to Jake's account. 

When you pay a bill online and opt to use a ‘bank account’ rather than a credit card, your payment is
being processed through the ACH network. By entering your account and routing number instead of
your credit card number, you’re initiating an ACH transaction.

Debit ACH transaction (such as paying a bill using ACH on biller site): A debit ACH transaction is made
when an ODFI requests funds from an RDFI after receiving authorization to pull funds from the
recipient’s account. For example, a debit ACH transaction occurs when a customer makes online
purchases or pays bills directly on a merchant’s or biller’s website. By providing the relevant bank
account information, the customer authorizes the debit ACH transaction.

Here we’re assuming you’ve previously connected your bank account and routing number, and set up
auto-pay. Your utility company’s bank sends an ACH debit entry to their ODFI (comppany’s bank). The
ODFI and RDFI ensure that the funds are available in your bank account and then process the transaction
so that the funds are sent to the utility company’s bank account. While the transaction is being
processed, the transaction is known as a ‘pending ACH transfer’.

For a credit ACH transaction (such as receiving your paycheck via direct deposit): 

A credit, or receiving money to your bank account works similarly to the above, except in reverse since
you’re receiving funds. You simply provide your account and routing number to your employer, and
when payday comes, your employer’s ACH processor initiates the funds transfer (via an ODFI) to your
bank account using the ACH network. A credit ACH transaction occurs when an Originating Depository
Financial Institution (ODFI) sends funds to a Receiving Depository Financial Institution (RDFI).

For example, a company paying its employees through direct deposit would initiate a credit ACH
transaction to deposit the funds in employees’ bank accounts on payday. When a merchant pays a utility
bill by sending the payment electronically, that is also a credit ACH transaction. Direct deposit and online
bill pay are two types of credit ACH transactions that are usually free for the Originator. A third type of
credit ACH transaction is an electronic funds transfer, which sends funds from one individual’s account
to another’s and usually comes with a small fee.

Glossary for ACH:

 Originator. An organization or person that initiates an ACH transaction to an account either as a

debit or credit.
 Originating Depository Financial Institution (ODFI). The Originator’s depository financial
institution that forwards the ACH transaction into the national ACH network through an ACH
Operator.
 ACH Operator. An ACH Operator processes all ACH transactions that flow between different
depository financial institutions. An ACH Operator serves as a central clearing facility that
receives entries from the ODFIs and distributes the entries to the appropriate Receiving
Depository Financial Institution. There are currently two ACH Operators: FedACH and Electronic
Payments Network (EPN).
 Receiving Depository Financial Institution (RDFI). The Receiver’s depository institution that
receives the ACH transaction from the ACH Operators and credits or debits funds from their
receivers’ accounts.
 Receiver. An organization or person that authorizes the Originator to initiate an ACH transaction,
either as a debit or credit to an account.
 Gateway. A financial institution, ACH Operator, or ODFI that acts as an entry or exit point to or
from the United States. A formal declaration of status as a Gateway is not required. ACH
operators and ODFIs acting in the role of Gateways have specific warranties and obligations
related to certain international entries. A financial institution acting as a Gateway generally may
process inbound and outbound debit and credit transactions. ACH Operators acting as Gateways
may process outbound debit and credit entries, but can limit inbound entries to credit entries
only and reversals.

So let’s say that electrical company wants to debit a customer’s account for the monthly bill (fixed
recurring payment). Once everything is verified, here’s how ACH works:

When you make an ACH transfer to your electric company, for example, via ACH, it starts with your
utility company’s bank sending an ACH debit entry to their ODFI. Next, the ODFI and RDFI
“communicate” with the customer account (you) to ensure that funds are available in your bank account
that’s being debited. If you have sufficient funds for the amount needed, then the transaction is
processed and the funds are routed to your utility company’s bank account. However, if you have
insufficient funds to cover the debit, the ODFI will receive a return code (more on that below).

Payment Through ATM: Authorization and Authentication :-

When customer swipes his visa debit card over an ATM, the visa network authenticate the transaction.
The bank that has issued the debit card authorize the paymnet. The request for payment is forwarded
by the ATM machine through the dedicated network to visa and visa network, after successful
authentication of the request, forwards the transactional details to the issuing bank. Upon verification
on availability of fund in the account, the issuing bank authorizes the payment. The ATM machine
receives the authorization and payment is made. A rejection either authentication level or authorization
level return the negative message to ATM machine and display the message to customer.

How ATM Processor Work
Needless to say all ATMs connected to some server. This is called Host Server or Host Switches.

In order to provide cash to the customer, the ATM must first access the customer’s bank account. The
customer enters his or her card and necessary information on the ATM keypad, and this information is
forwarded to the ATM processor (Host Processor or ISP). The processor then routes a transaction
request to the bank or institution that issued the card.

Assuming the requested amount is available to be withdrawn, the ATM processor will create an

electronic funds transfer from the cardholder’s bank (or issuing institution) and the processor’s account.
After the funds are transferred, the ATM processor will send an approval code to the machine,
authorizing the cash to be dispensed.

Sometime later (usually the next business day), the ATM processor will transfer the funds from the
cardholder’s account into the account of the merchant or owner of the ATM (banks, or any shop who
had installed ATM in his premises). This is how the merchant is reimbursed the cash that is dispensed
from the machine.

So when you request cash, the money moves electronically from your account to the host's account
(host processor’s bank account) to the merchant's account (bank or shop owner’s account). The host
processor uses an automated clearing house (ACH) to transfer funds from the cardholder’s account into
the account of whatever entity owns the ATM, whether it be another bank or a business. 

Card Payment:
For card payment, 1st card verification will be done, then routing to network. Then based on BIN, routing
to bank, then PIN validation. PIN conversation into hexa-decimal numbers.

Authentication in card: High level verification whether card is invalid, not reported as stolen or lost.

Authorization in card: check fund available, block codes, expiry, CVV code
Routing: So if someone swipes a card, then processor will decide to send that transaction to which
network. Then routing to bank, based on BIN send the transaction to particular bank.

The Basic Steps for a Transaction

(1) A customer completes a transaction at the merchant POS. POS system then passes the transaction,
card, and merchant bank info to the Gateway.
(2) The Payment Gateway collects transaction, card, and merchant data from the Gateway and passes it
securely to the linked Payment Processor
(3) The Payment Processor collects the Gateway data and identifies the correct Network/Association
based on the card type. Processor then routes all the transaction data to the Network.
(4) The Network collects the transaction information and verifies the available balance with the Card
Issuer*. In addition to the balance check, the network performs a security check to ensure the card is
within normal spending patterns. If the transaction is approved by Card Issuer and passes the security
check, the Network passes an affirmative response upstream to the POS and downstream to Card
Issuer**. During Settlement***, network collects transaction amount from Card Issuer account and
passes it to the Merchant Account.
(5) The Card Issuer is responsible for checking the available balance and passing the verified amount to
the Network during settlement
(6) The Merchant Bank receives the value of the transactions less the fees deducted by the Gateway,
Processor, and Network.

Player Details
(1) The Merchant POS is the in-store scanner or shopping cart. Often they will help to do the initial
collection of payment data. Online examples include Shopify, Magento, Drupal, and Big Platform. Fees
are usually based on a monthly fixed cost, a per-transaction fee, and an overall percent of transaction
fee. Generally the POS (or sometimes Gateway) charges the merchant a single fee that covers all the
downstream costs.

(2) The payment gateway is a secure connection between a POS and Processor. Examples of e-
commerce gateways include Payment Gateway to Accept Online Payments, Paypal, Stripe, and
Braintree. Verisign, CICS (IBM). 

(3) Payment Processors are responsible for collecting and routing data from the gateway to the
Network. The correct Network for each transaction is identified based on the first and last card numbers
the biggest players in processing are First Data and TSYS, followed by World Pay, Chase Paymentech,
and Wells Fargo.

(4) The Networks (or Associations) do the real work. They interface with the Processors to collect
transaction, customer, and merchant info; the Card Issuers to authorize purchases and collect payments;
and Merchant Banks to pass settled payments. As such, they have the highest fees (though some are
passed through to the merchant & issuing banks). Visa, MasterCard, American Express, and Discover are
the largest Networks.
(5) The Card Issuers are the consumer-facing element of the equation - they issue consumer cards,
collect monthly payments, and handle customer service. They receive a portion of the interchange fees
charged by the networks, and also make money from consumer lending, annual fees, and late fees. The
largest US issuers are American Express*, Discover*, Chase, Citi, Bank of America, Wells Fargo, and
Capital One.

(6) The Merchant Bank simply accepts transactions and deals with disputes (but that is a different post).
They also receive a very small portion of the interchange fee.

Interchange fee: is a term used in payment card industry to describe a fee paid between banks for the
acceptance of card based transaction. Usually it is fee that a merchant’s bank (“acquiring bank”) pays to
customer bank. However, there are instance where the interchange fee is paid from the issuer to
acquirer called reverse interchange.
For card payment settlement: Card payment is process thru card processor like FirstData, Global
Payment etc. When Person A made payment thru his credit card, transaction information routed thru
issuing bank and merchant bank thru their processor like MasterCard network or visa network. The card
network debit issue bank account and send settlement amount to Fiserv FBO account of the biller
(merchant) and then funded or credited to merchant bank account.

The cardholder’s bank approves the purchase and sends the approval to MasterCard or Visa who then
pass it on to the merchant’s bank to transmit to the merchant. Sometime processor do not send
settlement file to Fiserv like Global Payment, some processor do send approved transaction files to us
and later they get settle thru ACH.
 1. The difference between a void and a refund comes down to whether or not a transaction has
been settled. ... A voided transaction will typically disappear from a customer's credit/debit
account statement within 24 hours, a void transaction is a debit or credit card purchase that is
canceled after it has been authorized but before it has been settled. While a refund may take 3
to 5 business days to appear on a customer's credit/debit account statement? Refund generally
Transfers settled funds from your merchant account to the customer’s account and we do void
payment for same day or those payment which is not yet authorized.

Inward – When I submit my HDFC cheque to another bank ICICI and then ICICI submits this check to ACH
for inward clearing process for HDFC cheque. Inward clearing is when amount from my bank is goes to
another bank. Debit from my HDFC bank and credit to ICICI Bank is inward clearing.

Outward – Outward clearing is when I give ICICI cheque to my HDFC, HDFC send this cheque to ACH for
debiting amount from ICICI and credit into my HDFC, complete outward cheque clearing process for
HDFC bank.

Multilateral net settlement: A, B, C. A has to pay 20 to B & B has to pay 30 to A so B will pay only 10 , A
do not need to pay anything. But C has to pay 40 to B and B has to pay 30 to C, so C will only pay 10 t0 B
but now B also has to be 10 to A (A is getting 10 from B) so B will ask C to Pay A directly.
Multilateral clearing with a clearing house

The CSM will debit the accounts of Bank A and C at the central bank and credit its own account. The
Banks with a short position (negative final position) must ensure that sufficient amount is available on
their accounts. After crediting its account with funds from Banks A and C, the CSM will debit its account
and credit accounts of Banks with a long position (positive final position). Take note that the sum of all
Banks’ final positions is zero. Clearing system computes the final position between each bank and each
other participant bank. 

Bank A -70 B +20 C -50 D 100, so bank A & C with negative final position must give instruction to the
central bank to debit their account and credit the CSM account. And the CSM will give instruction to the
central bank to debit its account and credit the account of banks with positive final position.

Bank A-B=1000

B-C=2000

C-A=3000

Bank A -2000 CR

Bank B- 1000 DR

Bank C -1000 DR

So in DNS settlement, ACH will clear position to 0 (2000 – (1000+1000) credit less debit)

Bilateral: A has to pay 20 to B & B has to pay 30 to A so B will pay only 10, A do not need to pay
anything.  Bilateral clearing is the simplest case, since only two participants are involved. Imagine that
the two participants are you and me and we have to originate credit transfers because we live far away
from each other. If you owe me 100 € and I owe you 25 €, then there are two options to resolve our
debts with credit transfers:

 You can make a transfer of 100 € from your account to my account and I can make a transfer of
25 € from my account to your account.
  Or you can make only one transfer of 75 € (100 € – 25 €) to my account and everyone will be
happy. 75 € is the final position after the netting. The final position is made by neutralizing the
reciprocal commitments between you and me. That is the offsetting of obligations.

Hybrid system: a system that combines the characteristics of RTGS systems (e.g. the continuous

Processing and clearing of transfer orders) and net settlement systems (the operation of several

Settlement cycles per day, some form of netting procedure for transfer orders, etc.).

DNS: In DNS, the settlement takes place with all transactions received till the particular cut-off time. These
transactions are netted (payable and receivables) in NEFT whereas in RTGS the transactions are settled
individually. A system which settles on a net basis at the end of a predefined Settlement cycle (typically at the end
of – but sometimes during – the business day).

In NEFT – there is net settlement e.g. in clearing house, Axis has to pay 1 cr to HDFC & HDFC has to pay
75L to Axis then in settlement Axis will pay 25L to HDFC

IN RTGS, there is gross settlement e.g. if Axis has to pay 100 rs to HDFC and HDFC has to pay 50 rs then
then Axis will pay 1oo and HDFC will pay 50 to axis.

In IMPS: - Participating banks have to be on National Financial Switch (NFS) which enables secure and
instant communication.

Sending bank debit’s sender’s account.

Sends a secure message to receiver’s bank.

Receiving bank assumes these as “good funds” and credits beneficiary account.

Net settlement between both the banks happens in 3 cycles per day (working days).

Actual net fund transfer between the banks happens through RTGS for every settlement cycle. NPCI
every day at 2300 hrs creates a file for IMPS transactions and passes to RBI for clearing.
ACH payments are electronic payments that are created when the customer gives an originating
institution, corporation, or other customer (originator) authorization to debit directly from the customer's
checking or saving account for the purpose of bill payment.

Payment processors are the financial institutions that work in the background to provide the
core payment processing services used by an online merchant. These core processing services include
authorization and refunding of transaction requests. Payment processors usually have partnerships with
other companies, such as payment gateways, who deal directly with merchants to handle all processing
needs.
NOC: Notification of change

If there is any change in account number and consumer is not aware of this, so system will prompt the
new account number.

E.g. I am paying using my RBL account but RBL has been acquired by HDFC and they change the
account from their side, so when I will start paying, will prompt new account number given by HDFC

ओवरड्राफ्ट अकाउं ट एक ऐसा अकाउं ट है जिसमे आप अकाउं ट में पड़ी हुई राशि से भी ज्यादा राशि निकाल
सकते है । यह एक तरह का लोन अकाउं ट ही है । आपको केवल लोन पर ली हुई राशि पर ही ब्याज दे ना
होगा । यह भी एक करं ट अकाउं ट ही होता है इसीलिए इसमें आप रोज कितने भी लेन दे न कर सकते है ।
आपको हर दिन ख़तम होने पे जो बकाया दे य राशि है उसी पे ब्याज दे ना होगा ।

Cash Credit असल में एक तरह का Loan होता है जो हमे एक निर्धारित सीमा की अवधि के लिए bank से मिलता है
और ऐसा उस स्थिति में होता है जब हम कोई business कर रहे है जिसमे हमे काम करने के लिए या दस
ू री business
की जरूरतें परू ी करने के लिए कुछ दिनों के लिए अधिक पैसे की जरुरत होती है | ऐसे में bank हमे इस बात के लिए
allow करता है कि जितना पैसा हमारे  Current Account में है उस से अधिक पैसे भी हम काम में ले सकते है और
यह Short Term या Long Term दोनों हो सकती है | यह Traditional Loan से इसलिए अलग होता है क्योंकि
traditional loan में आपको एक तय सीमा के लिए loan मिलता है और आपको समेत ब्याज उस पैसे को बाद में
bank को वापिस कर दे ना होता है और इसे लेने के लिए आपको loan प्राप्त करने के लिए सभी जरूरी शर्तों का पालन
करना होता है और सब तरह की औपचारिकता का भी पालन करना होता है और यह प्रोसेस थोडा लम्बा होता है लेकिन
Cash Credit के मामले में ऐसा नहीं होता है | क्योंकि Cash Credit बैंक एक तरह से आपको सुविधा के तौर पर
मिलती है जिसमे आप जितने पैसे अपने अकाउं ट में होल्ड करते है उस से अधिक सीमा का धन की निकासी आप कर
सकते है वो भी बिना किसी पपेरवर्क के |

The first difference is to whom it is allowed to. Overdraft is given to an individual with a current
account on the bank. While cash credits are more commonly offered for businesses than
individuals. Cash credit requires security assurances. Another key difference is with their rate of
interest. Normally overdraft has a higher interest rate than ash credit.
The automated clearinghouse (ACH) system is a nationwide network through which depository
institutions send each other batches of electronic credit and debit transfers.]

If you want to check the service class code i.e. PPD,CCD of any client, login reseller portal go to set
up and select client Id there you can see class code.
In entry detail record - Under NACHA Operating Rules (also known as ACH rules), a prenote’s purpose is
to “validate” the routing number and account number of the receiving bank or credit union.

Payment Format Code O ID 1/10 Code identifying the payment format to be used

Commercial ACH Batches must have CCD in the Header info, while Employee reimbursements must have
PPD in the Header info. (All these are use in ACH file)
Entry Detail Addenda Record - This record is optional. This record contains
Additional information relating to the prior entry detail record. It is primarily used for CCD+ and CTX,
which are corporate to corporate transactions.
ACH/CCD - Cash Concentration/ Disbursement type
ACH/PPD - Prearranged Payment and Deposit entry.
ACH/CTX - Corporate Trade Exchange 
ACH/PPD transactions are typically corporation to individual. We use PPD for reimbursing employees for
travel and expense. 
ACH/CCD transactions are corporation to corporation. We use the CCD and CTX transactions for EFT
payments to business partners. 
We use ACH/CTX when the corporate trade payment to business partners is accompanied by addendum
information. 

PPD - Prearranged Payment and Deposit Entry (Consumer)

This is used for credit transactions such as direct deposit of payroll, pension, dividends, as well as debit
transactions such as payment of utility bills, mortgages, loans and other recurring payments.

CCD -Cash Concentration or Disbursement (Corporate) Corporate Credit or Debit

Can be used to consolidate and sweep cash funds within an entity's controlled accounts, or make/collect
payments to/from other corporate entities.

Specific Return Reason Codes ACH:

 R08 Payment Stopped

24 hours
 R29 Corporate Customer Advises Not authorized
24 hours
No Written Statement of Unauthorized Debit needed
  R31 Permissible Return Entry (CCD & CTX only)
No time limit — determined by the ODFI and RDFI
RDFI MUST request and receive explicit permission from ODFI BEFORE returning

Exception Return Reason Codes

 R05 Unauthorized Debit to Consumer Account using Corporate SEC Code 

An ACH Processor:-handles debits to member bank accounts (checking or savings).

A Merchant Processor: - handles credit card transactions.

Level3 Processing – This mean giving more information to processor like order no along with cvv/ zip
code etc.

Types of checks:
 Crossed check: If we want a check to not be collected in cash, we can cross it by drawing two
parallel lines that cross the check vertically. This will mean that the check can only be deposited
into an account. This way, there will always be a way of identifying the person that collects it.
(Not in cash, rather credited into account of payee) he will fill the slip with giving his account
number, PAN card
 Bearer check: It is the most common type of checkbook. The payee is the person that hands the
check in at the bank, simply put. It can be given to a third party in order for them to collect the
payment; this is called endorsement. For this reason, a bearer check can prove rather
dangerous; in the event of loss, anyone that finds it could collect the payment.
 Order check: This type of check is the most advisable, as it is more secure: the only payee is the
person or entity whose name appears on it
 A certified check is a personal check written by a bank account holder, drawn on the account
and guaranteed by the bank. The bank verifies that the signature is genuine and that
the checkwriter has enough money for the transaction.

NSF: Non-Sufficient fund – or overdraft

Let’s assume that John Doe has $1,000 in his checking account today. He goes to the mall and writes a
check for $1,250 at a furniture store. Because there are insufficient funds to cover the amount of the
check, John is writing a bad check. When the furniture retailer attempts to deposit the check, the
furniture retailer’s bank (Bank ABC) will present the check to John Doe’s bank for payment. John Doe’s
bank will then either pay the check (which might occur if John Doe has overdraft protection at his bank)
or "bounce" the check by returning it to Bank ABC without payment. Often, banks stamp the check itself
with a large "NSF" stamp (which stands for "nonsufficient funds"). Typically, Bank ABC will charge the
furniture retailer a fee for presenting a bad check, and John Doe’s bank will charge John Doe for writing
a bad check. The furniture store will also likely charge John Doe a fee for the bad check.

I have bank account of ICICI. Vodafone is my biller & his account is in HDFC. BMX is my platform where
Vodafone allow to make payment for his bill.
I have bill of 1000 rs but I have account balance is 900, I made payment, consumer debit was not
successful due to NSF, then card processor will inform his biller platform BMX that customer bank
account has not balance. Processor send notification of first return and money transferred from FBO
account to biller account by card processor. Also Fiserv process charge back to client ICICI and money
transferred from FBO account by processor and then money transferred to FBO account from client
account and then reconciliation and settlement.

Refer image from treasury document.

Vodafone as biller will give option to BMX for 2nd day presentment and as soon as I will add money, BMX
will resend ACH file on next day to HDFC & HDFC will check with ICICI for clearance.

Such 2nd day presentment facility will be given to BMX not to customers.

CHARGEBACK -
https://www.signifyd.com/resources/fraud-101/chargeback-process-in-depth/

Dealing with chargeback requests

https://paylane.com/support/articles/what-is-a-chargeback-all-you-need-to-know-about-this-
mechanism/

The reversal of funds can be triggered in 3 different ways:

1. When the return of funds to the customer is voluntarily initiated by the merchant;
2. When the merchant cancels the transaction after it has been authorized (but not yet settled);
3. In the case of a chargeback where the validity of the transaction is questioned by the customer.

EACH BANK PLAYS A ROLE IN THE CASE OF CHARGEBACKS

When a cardholder requests a chargeback, the issuing bank will forcibly reverse the transaction in
question, withdrawing the money from the acquirer and returning it to the cardholder.

The merchant can choose to dispute the chargeback through a process known as representment. In this
case, the acquirer will gather compelling evidence on the merchant’s behalf to prove the validity of the
original transaction.

The issuer will then examine the evidence and provide an outcome, siding on behalf of either the
merchant or the cardholder.
A chargeback is initiated by the card holder and can (but doesn't have to) result in a return of funds. It's
the bank's duty to determine whether such a request was reasonable. It’s when the credit-card users
informs his/her issuing bank to reverse a charge (or challenge a charge) because either the
product/services were not delivered or damaged, or they did not order it. CHARGEBACKS – items
automatically processed by the Processor to have money sent back to the Customers bank. These
requests come from the Bank that move through the Processors. Chargeback is raised by customer
via bank.

Chargeback Scenario- BMNext receives a File from Paymentech that provides details on specific
Chargebacks for the previous day’s activity. The file is loaded into the system and money movement
occurs back through the Processor (Paymentech) and then to the Customers Bank Account. This is all an
automated process.

REFUND SCENARIO: Knoxville Utility Board Customer calls BMNext Call Center and advises they
processed a duplicate payment accidentally. The BMNext Call Center Agent will advise we can Refund
the duplicate payment.

A refund is a payment operation initiated by the merchant, it refers to a specific card transaction and
allows to return the whole or part of the transaction amount. – Items manually processed on the
BMNext side to have money sent back to the Customers bank. These requests come directly from the
Customer or the Client.

Explain EFT Return / Chargeback-

EFT return: When the Consumer ACH payment could not be processed successfully. This is always
initiated by the Processor. Reason for this can be Insufficient Funds / fraud / any other reason. Processor
informs about return to Fiserv.

I saw my card statement and found some incorrect entry, then customer will contact his card issuer
(HDFC) and hdfc will ask merchant bank for this debit. If merchant (another bank) feel this is incorrect
charge then he will inform processor to initiate charge back in case there is any issue then Fiserv
admin will do chargeback.

I made payment for Vodafone. His bank will be authorize with my bank and my bank has confirmed
that there is not sufficient fund. ACH will informed to BMX platform and when my CAWA job will run
this will collect all negative payment details and send information to Biller. In remittance file this will
have my EFT return also (EFT return will be automatic process in between ACH processor) In case
there sis production down, Domain Admin will do EFT return/ Chargeback on behalf of ACH in BMX
platform,

Chargeback: I had made payment and this is settled (Authorized) but I feel payment/ product is actually
not settled or delivered then I will ask CSR / Admin to initiate Charge back request for payment made by
me. <this is applicable in case of card payment & EFT return is applicable in ACH (saving/checking
account>
  EFT is use for ACH clearance where for card settlement we have card processor like Vantiv,
FirstData, and Global Payment first. All processor have different cut off time for settlement some
of have daily / 0.5 hours. This processor give details to their bank and they authorized with
issuer bank.
 Difference in Refund & EFT Return – When payment is authorized but you feel you made excess
payment then request for refund and CSR will add refund for you. If there is NSF then ACH will
raise return/Chargeback with your issuer bank and BMX will share remittance file with positive
and negative entries to the biller. The customer will get notify about EFT return. Sometime
domain admin will also do return on behalf of biller.

Acquirer - the financial institution that processes credit card transactions. An acquirer is also normally
interchangeably referred to as a Processor even though they are different. 

Nostro & Vostro Account explain:

For instance, consider two banks: ABC Bank, New York and XYZ Bank, Mumbai. For XYZ Bank, its account
in ABC Bank is a ‘Nostro Account’ (Italian for "My account with you" or "My account of my money
maintained by you") and in the view of ABC Bank, New York, the same account is a ‘Vostro Account’.
ABC will refer to XYZ account as Vostro Account (Italian for "Your account with me" or "My account of
your money maintained by me"). Reconciliation of these accounts is called Nostro Account
Reconciliation or simply Nostro Reconciliation.

If I reverse the table, ABC account in Mumbai in XYZ bank with Indian currency then for XYZ this will be
Vostro account of ABC (US bank) and for ABC they see this account as NOSTRO account.

Further, the account maintained by a bank (ABC) with another bank (XYZ) is known as a Nostro account
like I already discussed, and the statement which it receives from the bank with which it maintains
accounts in foreign currency is known as a Nostro account statement. The replica of this account is
maintained by the bank in its own books for operational purposes in local currency and is known as
a Nostro mirror account. It is maintained by the local bank (XYZ) for accounting of inflows and outflows
of forex taking place from a Nostro account of the bank. Let’s say the Nostro account deals in USD (the
foreign currency). So if the Nostro account in USD shows the actual funds position and actual credits and
debits leading to the funds position and is maintained in the books of the bank ABC, the Mirror(of
Nostro) account is maintained in the books of the local(XYZ) bank in the local currency, say INR.

Loro Account: For example, BOI wants to transact with HSBC, but doesn't have any account,
while SBI maintains an account with HSBC in U.K. Then BOI could use SBI account.

ACH - (Automated Clearing House) A system of the U.S. Federal Reserve Bank that provides electronic
funds transfer (EFT) between banks. It is used for all kinds of fund transfer transactions, including direct
deposit of paychecks and monthly debits for routine payments to vendors. The ACH is separate and
distinct from the various bank card networks that process credit card transactions. ACH operations are
done in a batch mode, which can take up to 72 hours before the money is actually transmitted. A return
notification is sent if there are insufficient funds in the account. 
Authorization - The approval given from the customer's bank that a transaction has been approved.
When a card is authorized, a unique code is generated for each specific transaction. 

AVS (Address Verification System) - In 1996, Visa/MasterCard started requiring businesses who manually
key in credit card transactions to have a special fraud prevention feature on their credit card
processing equipment. This feature is referred to as an address verification system (it checks to see that
the billing address given by the customer matches the credit card). 

Bankcard -A debit or credit card issued by a bank or other financial institution, such as a MasterCard or
Maestro card. 

Batch - A submittal of transaction information to credit card Acquirer to be settled to the merchants
bank account. 

Capture - The submission of a credit card transaction for processing and settlement. 

Card Association - a specific credit card company, e.g. Visa, MasterCard, American Express, Discover,
JCB, etc. 

Cardholder -The customer to whom a card has been issued or the individual authorized to use the card. 

Chargeback - A chargeback occurs when a card holder disputes a credit card transaction with his or her
credit card issuer. The card issuer initiates a chargeback against the merchant account. The amount of
the disputed transaction is immediately withdrawn from the merchant's bank account, and the
merchant has 10 days in which to dispute the chargeback with proof of purchase, signature, proof of
delivery, etc. A chargeback fee is usually assessed to the merchant on top of the actual transaction. See
also retrieval request. 

Chargeback defense - A customer who does not receive his goods or services, or says he did not place an
order, can ask his issuing bank to charge back the merchant. The Issuing Bank sends the chargeback
request to the merchant bank, which forwards it to the merchant asking to validate the charge.
Information such as the amount, an invoice, customer signature, or shipping documents, and the
shipping address (used in AVS during the authorization) are needed to defend against a chargeback. 

Clearing - The process of exchanging financial transaction details between an acquirer and an issuer to
facilitate posting of a cardholder's account and reconciliation of a customer's settlement position. 

Co-branded card - A credit card issued jointly by a member bank and a merchant, bearing the "brand" of
both. 

Corporate card - A bankcard issued to companies for use by company employees. The liability for abuse
of the card typically rests with the company and not with the employee. 
Credit card processors (or third-party processors) - Merchant services providers that handle the details
of processing credit card transactions between merchants, issuing banks, and merchant account
providers. Web site operators usually must first establish their own merchant account before
contracting for credit card processing services. 

Currency conversion - The process by which the transaction currency is converted into the currency of
settlement or the currency of the issuer for the purpose of facilitating transaction authorization, clearing
and settlement reporting. The currency of transaction is determined by the acquirer; the currency of the
issuer is the preferred currency used by the issuer, and most often, the currency in which the cardholder
will be billed. 

Debit card - A plastic card used to initiate a debit transaction. In general, these transactions are used
primarily to purchase goods and services and to obtain cash, for which the cardholder's asset account is
debited by the issuer. 

Electronic draft capture (EDC) - A system in which the transaction data is captured at the merchant
location for processing and storage. 

Electronic funds transfer (EFT) - (also see ACH) A system of the U.S. Federal Reserve Bank that provides
electronic funds transfer (EFT) between banks. It is used for all kinds of fund transfer transactions,
including direct deposit of paychecks and monthly debits for routine payments to vendors. The ACH is
separate and distinct from the various bank card networks that process credit card transactions. ACH
operations are done in a batch mode, which can take up to 72 hours before the money is actually
transmitted. A return notification is sent if there are insufficient funds in the account. 

Interchange fee - The fee that the Card Association charges the merchant to get the funds into his bank
(merchant bank) and to get the billing information to the cardholder's bank (issuing bank). Interchange
fees are based on following credit card regulations and capturing appropriate data including card swipe,
address, and electronic signature as needed. These fees are also based on the timeliness of the
settlement of transactions. 

Issuer - A financial institution that issues a credit card to a consumer or business. 

Issuing bank - The bank that maintains the consumer's credit card account and must pay out to the
merchant's account in a credit card purchase. The issuing bank then bills the customer for the
debt. Merchant - Any business that accepts credit card payments. 

Payment gateway -  A payment gateway is software used to transfer payment information from the
merchant to acquiring bank. 

Purchasing card - Designed to help companies maintain control of purchases while reducing the
administrative cost associated with authorizing, tracking, paying, and reconciling those purchases. 

Processor - A company who communicates with the issuing banks to authorize and settle complete
credit card transactions. 

Reserve account - A portion of the revenue from a merchant's credit card transactions, held in reserve
by the merchant account provider to cover possible disputed charges, chargeback fees, and other
expenses. After a predetermined time, holdbacks are turned over to the merchant. Note: Merchant
account providers almost never pay interest on holdbacks. 

Retrieval request - A retrieval request is what happens when a cardholder cannot remember a credit
card transaction, or the bank wants to order information for some reason. The card issuer initiates a
retrieval request, in which the merchant has 10 days to respond with the order information or the
retrieval request will turn into a chargeback. There is usually a retrieval request fee issued against the
merchant also in these cases.  When the credit card issuer contacts the merchant to obtain information
about a transaction charged to one of its cardholders.

SSL (secure socket layer) - A system for encrypting data sent over the Internet, including e-commerce
transactions and passwords. With SSL, client and server computers exchange public keys, allowing them
to encode and decode their communication. 

What is Direct Deposit?

Direct deposit is an electronic payment from one bank account to another. For example, money moves
from an employer’s bank account to an employee’s bank account, although there are several other ways
to use direct deposit. To make transfers, banks use the Automated Clearing House (ACH) network, which
coordinates these payments among financial institutions. Here's a look at how these work.

Automatic transactions: When you receive funds via a direct deposit, your account balance will
automatically increase when the payment arrives. You don’t need to accept the payment or deposit
funds to your account, which would be required if you received cash or a check. Likewise, when you pay
with direct deposit, your checking account balance will automatically decrease when the payment leaves
your bank.

Settlement - The process by which merchant and cardholder banks exchange financial data and value
resulting from sales transactions, cash disbursements and merchandise credits.

Clearing is the transfer and confirmation of information between the payer (sending financial institution)
and payee (receiving financial institution).

Settlement is the actual transfer of funds between the payer's financial institution and the payee's
financial institution. 

Fedwire & chips are clearing system who carry out fund transfer. Fedwire is a real-time gross settlement
system, while CHIPS allows payments to be netted. CHIPS pay real money using Fedwire.

CHIPS – ACH Payment in US

Fedwire: RTGS for US

SEPA- ACH for euro payment – Euro Region

TARGET2: RTGS for SEPA – Euro Region

CHAPS: RTGS for UK

Faster Payment – IMPS

BACS – ACH for UK

NEFT - EFT for India

RTGS: RTGS in India

LVTS – RTGS for Canada

RTGS- Only for domestic funds transfers in single currency

What's the Difference between Direct Deposit and a Wire Transfer?

Direct deposit is cheaper and slower than a wire transfer. A direct deposit is limited to the currency of
your local direct deposit banking system. For example, a client can only receive payment in USD in the
United States via the ACH system, EUR in Europe via the SEPA system, GBP in the United Kingdom via
the BACS system, and CAD in Canada via the EFT system. USD cannot be received via direct deposit
outside of the United States, and the systems for non-USD currencies are also exclusive to their
currency's respective banking system. Direct deposits are processed ovenight. Direct deposits outside of
the US will incur a conversion fee of 2.5%. Depending on the amount of the payment, a wire transfer
may be a cheaper option.

A wire transfer is almost immediately deposited into the client account. Clients are charged $15.00 per
wire transfer. Clients choose to receive wires when they want to receive a currency that is not the local
currency. For example, if a client is in the United Kingdom and would like to receive USD, the USD needs
to be wired to the account in the United Kingdom. A wire is also necessary when FastSpring’s bank does
not have a local presence in the client’s country.

Wire transfers
Wire transfers are a fast way to send money electronically. Typically, wire transfers go through within
one business day or even on the same day it was sent.

Wire transfers are normally used for large payments. And, this type of transfer is best for one-time or
infrequent payments.

There is a fee to send wire transfers. The fee depends on the bank or wire service you use, but it will
typically cost you between $10-$30 dollars. The receiver might have to pay a small fee to get the funds.

To send a wire transfer, you will likely need the name of the recipient’s bank, their account number, and
routing number. You can also send the money to another wire transfer location instead of a bank
account. In this case, you will need the recipient’s name and the name and location of the final transfer
destination.
The funds you want to send must be available at the time you initiate the payment. Otherwise, the
transfer won’t work. When you send the payment, the money is immediately removed from your
account. Wire transfers cannot be reversed, so make sure the information and money amount you
entered are correct. Once the receiver gets the payment, they can use the money immediately.

You might be able to set up your wire transfer online. But, depending on your service and the amount
you want to send, you might need to set up the payment over the phone or in person.

ACH transfers
ACH transfers are slower than wire transfers. ACH payments take several days to complete, although
you might be able to pay more to make the transaction faster.

ACH transfers are used for smaller, frequent payments.

These transfers are a low-cost way to send money. Depending on the number of transfers, the transfer
speed, and your provider, the transaction might only cost a few dollars. Sometimes, you can even make
ACH payments for free. ACH transfers are free for the recipient.

To send an ACH payment, you need the bank account number and routing/ABA number for the
recipient.

You can send an ACH transfer without having sufficient funds. But, you will be charged a fee for non-
sufficient funds. The money will be deposited in the recipient’s account within a few days. If you make a
mistake, such as accidentally sending too much money, you can reverse the payment. However, the
reversal is at the discretion of the ACH transfer provider.

There will be a cut-off time for submitting the ACH payment. If you don’t submit the payment by the cut-
off time, your provider won’t begin processing the payment until the next business day.

You can typically set up an ACH payment online, whether through your bank or another provider

Bank of America, N.A.:

CHIPS Routing Number -0959

SWIFT BIC -BOFAUS3N123/ AXIS IN BB 423

FED ABA -026009593

Fedwire – This is the Federal Reserve’s funds transfer system and the one that is most often involved in
wire transfers that you will encounter in everyday banking matters. Fedwire is owned and operated by
the 12 Federal Reserve Banks. It is a networked system for payment processing between the member
banks themselves, as well as other participating institutions. These include depository financial
institutions in the U.S., as well as the American branches of certain foreign banks or government groups,
provided they maintain an account with a Federal Reserve Bank.

Fedwire operates Monday through Friday, excluding holidays, from the hours of 9 p.m. ET on the prior
calendar day to 6:30 p.m.
International Funds Transfer involving FedWire & SWIFT

The originator (a Corporate) in U.S. requests its bank (Bank of America, NY) to initiate
cross border funds transfer through Fedwire to KLM Pvt. Ltd. INDIA
• Bank of America, NY (Originator’s FI), debits the payer’s account and credits the
clearing account
• Bank of America (NY) sends Fedwire message to Citibank (NY), which is ICICI
bank’s Correspondent bank
• At FED, Bank of America, NY account is debited and Citibank NY account is
credited. Message with completed payment details is forwarded to Citibank
• Citibank Bank (NY) debits the clearing account and credits the ICICI Bank’s
Vostro account, which it holds
• Citibank bank (NY) sends SWIFT MT 103 message to ICICI Bank, India
• ICICI bank on receipt of MT103, debits Vostro Mirror account to Credit KLM
India Pvt. Ltd.
KLM India Pvt. Ltd. receives the funds

CHIPS – CHIPS operates a real-time, private-sector payment system owned by banks. Each CHIPS
participant is assigned a four-digit CHIPS Participant Number (often referred to as the CHIPS ABA
number), which serves as a bank identifier within CHIPS and in SWIFT messages. In addition, CHIPS
participants have the ability to assign a unique Universal Identification Number (UID) for accounts on
their books. This six-digit UID is a valuable tool in promoting straight-through processing (STP), since it
can be used to uniquely identify bank and corporate customers without the need to provide sensitive
account information

CHIPS is a wire transfer network similar to Fedwire. The differences are that CHIPS is owned by The
Clearing House, is not real time, and is less expensive than Fedwire. CHIPS nets all the transactions at the
end of the day, similar to the ACH Network. Whereas fedwire settled gross settlement.

Similar to Fedwire, transactions via the CHIPS network cannot be reversed, which is a reason why CHIPS
is faster than the ACH Network.
First, it is privately owned, whereas the Fed is part of a regulatory body. Second, it has 47 member
participants (with some merged banks constituting separate participants), compared with 9,289
banking institutions (as of March 19, 2009)[1] eligible to make and receive funds via Fedwire. Third, it
is a netting engine (and hence, not real-time).
International Funds Transfer involving CHIPS & SWIFT

KLM India Pvt. Ltd. (Originator) which owes funds to JLR Inc. NY (Beneficiary), requests
its bank (ICICI, India) to initiate funds transfer to JLR Inc.’s a/c with Bank of America
(BofA) in the U.S.
 • ICICI Bank, India debits the payers a/c and credits the Nostro Mirror A/c for
Citibank
• ICICI Bank sends a SWIFT message to Citibank, NY which is a CHIPS participant,
instructing them to debit its ICICI Nostro account with them
• Citibank, NY debits the ICICI Nostro A/c and credit the clearing before sending a
message to CHIPS
• At CHIPS, both Citi and Bank of America are the participants; thus, CHIPS debits
the Citi a/c and credit Bank Of America a/c before forwarding a credit
instruction to Bank of America
• On receipt of CHIPS messages, Bank of America, NY debits the clearing account
and credits the JLR Inc.’s a/c with them
• JLM Inc., NY receives the funds

SWIFT – An acronym for Society for Worldwide Interbank Financial Telecommunications, SWIFT is a non-
profit cooperative headquartered in a southeastern suburb of Brussels, Belgium, just a cannon-shot
away from Waterloo. SWIFT actually is not a payment system but rather is simply a communication or
message system used to instruct a bank to transfer funds from a specific account to a specified account
at another bank. Then the actual transfer of the funds is carried out on clearing systems such as Fedwire
or CHIPS.You can use SWIFT payments to transfer money between different countries. Swift message is
getting use under colon for example -:57D:

What is a SWIFT / BIC code?

Bank code A-Z4 letter code. It usually looks like a shortened version of that bank's name.
Country code A-Z2 letter code. It says which country that bank is in.
Location code 0-9 A-Z2 digit location code that could be either 2 letters or numbers. It's says where that
bank's head office is.
Branch Code 0-9 A-ZOptional 3 digit code. It specifies a particular branch, instead of the bank's head
office. 'XXX' for head office.
Payment orders sent via SWIFT MTl03
Field 32: Must specify the amount of payment in CNY (Chinese Yuan)
Field 57: Beneficiary bank must be located in mainland China Line 1: ‘/CN’ followed by CNAPS identifier
or; SWIFT BIC (if the beneficiary bank is a branch of Bank of China) Line 2: SWIFT BIC (if Bank of China
branch)
Field 59: Beneficiary’s address must be located in mainland China Account number, full name, and
address must be provided (name or address must not be truncated Beneficiary must be a commercial
entity, not an individual person
 Field 72: Must indicate the following information: • Authorization to debit correspondent’s USD
account • Codeword required by Wells Fargo for trade notification: /PSET/CN/TR (codeword should not
appear in the first line of field 72, should fit on one line, and should not be truncated) • Wells Fargo FX
contract number, following the codeword

E.g. AAAABBCCDDD

How are international SWIFT wire transfers settled?

Wells Fargo, like most banks does not have a relationship with every possible bank that
customers may want to transfer money to. So, they usually keep relationships with a
correspondence bank; one (or multiple) banks for each transfer currency.

Most of the world's financial transactions take place in "major currencies"; generally USD, EUR,
GBP.

For USD, the clearing bank is usually a US-bank; for EUR it is usually a bank in the Euro Zone.

So, suppose you want to transfer 200 EUR from your US Wells Fargo account into an account in
French Bank Z.

First, you will enter (for example at the online banking portal of Wells Fargo) the amount you
want transferred. This will either be in EUR or USD. So you might say transfer 200 EUR, and
then the bank will tell you the USD equivalent it will deduct from your USD account.

Next, Wells Fargo will transfer this money from your account into a holding account of
correspondent bank; and send a notice to their correspondence bank for EUR - this notice
(usually sent over SWIFT) has your bank information, your personal information, information
about the beneficiary bank and information on the beneficiary account.

That European counterpart bank then further has settlement accounts with the local French
banks. It could be that there are multiple banks in the middle; the Euro bank that Wells Fargo
talks to might be in Germany, for example.

In the end, all Wells Fargo has to do is settle with their correspondence Euro bank; and then
that bank further settles with their other banks until eventually the money reaches French Bank
Z.  This process happens at a set interval; long after the actual transfer has taken place.
These settlement accounts are called Nostro and vostro accounts depending on the banking
relationship.

Let’s look at Italian bank UniCredit Banca, headquartered in Milan. It has the 8-character SWIFT code
UNCRITMM.

First four characters: the institute code (UNCR for UniCredit Banca)

Next two characters: the country code (IT for the country Italy)

Next two characters: the location/city code (MM for Milan)

 Last three characters: optional, but organizations use it to assign codes to individual branches. (The
UniCredit Banca branch in Venice may use the code UNCRITMMZZZ.)

SWIFT message include MT followed by 3 digit number that denotes message category, group and
specific message type

MT 304- 3 is treasury market; 0 is financial institution transfer; 4 is notification

Category 1 – MT1xx – Customer Payments & Cheques

Category 2 – MT2xx – Financial Institution Transfers / Bank

Category 3 – MT3xx – Treasury Markets, to handle Foreign Exchange, Money Markets and Derivatives

Category 4 – MT4xx – Collection & Cash Letters

Category 5 – MT5xx – Securities Markets

Category 6 – MT600 – MT609 – Treasury Markets – Previous Metals

Category 6 – MT643 – MT649 – Treasury Markets – Syndications

Category 7 – MT7xx – Documentary Credits & Guarantees

Category 8 – MT8xx – Travelers Cheques

Category 9 – MT9xx – Cash Management & Customer Status

Sample SWIFT Message:

{2:I101YOURBANKXJKLU3003} where:

 {2: – Indicates the start of the Application Header block

 I – Informs you that you’re in Input mode (i.e. the Sender), O would indicate Output mode – so
you would be the recipient of the message
 101 – Message type – in this case, an MT101
 YOURBANKXJKL – The recipients BIC, consisting of their BIC (YOURBANK) + Recipients Logical
Terminal Code (X) + Recipients Branch Code (JKL) -- this is swift code
 U – Message Priority:
 U – Urgent
 N – Normal
 S – System
 3 – Delivery Monitoring – Ask your SWIFT contacts or Service Bureau how you should populate
this, if at all – Optional
 003 – Non-delivery notification period – again, ask your SWIFT contacts how to populate this, if
at all – Optional
 } – Indicated the end of the Application Header Block

What is a SWIFT MT202 cover payment?

If you are in India and banking with ICICI, and want to send a swift remittance to an ABC bank in New
Zealand where ICICI doesn’t maintain an account. Then there will one or more intermediary banks
involved before beneficiary receives the funds. In this scenario to speed up the payment a separate
MT 202 COV message, with minimum details of underlying credit transfer, is send to the
intermediary banks to settle the transaction with ABC bank. In the meanwhile MT 103 is directly
send to the beneficiary bank for credit the beneficiary.

MT 202 is use to transfer money between Bank.

MT 1XX message use for Customer to BANK transaction.

Mt2XX messages use for bank to bank transaction.

MT 202 is used to order the movement of funds to the beneficiary institution via another financial
institution/Intermediary Bank.

Now Mt 202 cov is used when customer is involved. MT 202 is used when MT103 is use.

In Short MT 202 Cov message have end to end details, This MT 202 cov basically used for “Anti-
Money Laundering”. The MT 202 COV message system includes the details of the originating bank
and the beneficiary bank’s details so as to monitor any suspicious activities. But, the MT 202
message that was sent to the intermediary bank would not disclose the information of the
originating bank and the beneficiary which was leading to many terrorist and money laundering
activities(& stuff like that …), 
 SWIFT & SEPA: How international money transfers actually work:

 SWIFT enables money transfers internationally, while SEPA payments can only
be made within the SEPA area.
 SWIFT transfers can be executed in various currencies and the SEPA initiative
encompasses transfers in Euro alone.

SEPA: It really is ACH for European countries under EURO zone

Let’s assume John wants to send £20 from his bank account in the UK to Alice’s account held with a bank
in Singapore. Depending on the bank’s relationship, there are two ways in which this transfer can take
place:

Banks have a direct relationship

If both banks have a direct relationship with each other, or in other words, if
Bank 1 has a commercial account with Bank 2 and viceversa, the transaction
would look like this:

John’s bank (Barclays UK) will send a SWIFT message to Alice’s bank
(Lloyds Singapore), informing them of the transfer. Once the message is
received (usually within minutes), the funds can be transferred directly
between the two banks:

1. John’s bank (Barclays) will debit John’s personal bank account by £20. ➖
2. John’s bank will credit Lloyds’ commercial bank account held with
Barclays by £20. ➕
3. Alice’s bank (Lloyds) will credit her personal bank account by £20. ➕
 Here commercial bank account means – Nostro / Vostro account

Banks have no direct relationship

If the banks don’t have a direct relationship, one or more intermediary banks
must be found to facilitate the transfer.

So, John’s bank (Bank 1) will once again send a SWIFT message to Alice’s
bank (Bank 2), informing them of the incoming transfer. But since neither
banks hold accounts with one another, SWIFT will find an intermediary where
both banks have commercial accounts - let’s call it Bank X. Once the
intermediary is found, the funds can be processed at the end of the day (or
based on some other predetermined schedule):

1. Bank 1 will debit John’s personal account by £20. ➖

2. Bank 1 will ask Bank X (the intermediary bank) to debit their commercial
account (Bank 1’s) by £20 ➖, and credit Bank 2’s commercial account. ➕
3. Bank X deducts a small fee for acting as an intermediary (let’s say £0.40
➖) from the amount being transferred, and credits Bank 2’s commercial account
by £19.60. ➕
4. Bank 2 will then credit Alice’s personal account by £19.60. ➕
Since there were more operations happening behind the scenes, this transfer
is more expensive (notice the hypothetical £0.40 fee) and takes longer to
complete (usually between 3 to 5 working days). In this case, there was only
one intermediary bank (Bank X), but some transfers can require two or more
intermediaries, which introduces even more fees and delays. 🤨

SEPA Transfers
Let’s revisit our previous example and assume that John is sending Alice €20,
and that both banks are part of SEPA. If the two banks have commercial
accounts held with one another, then the flow of money is the same as our
first example in this post:

1. John’s bank (Bank 1) will debit John’s personal account by €20. ➖

2. John’s bank will credit Bank 2’s commercial account held with Bank 1 by
€20.➕
3. Alice’s bank (Bank 2) will credit her personal account by €20. ➕
 If they do not have an established relationship, the transfer will pass through a
central bank account in Europe, let's just call it the European Central Bank for
the sake of our example. In a very simplified way, this is how the money would
flow:

1. John’s bank will debit his account by €20 ➖

2. John’s bank will credit their commercial account held with the European
Central Bank (intermediary bank) by €20 ➕
3. The ECB will then credit Alice’s bank by €20 ➕
4. Alice’s bank will credit her account by €20 ➕

Fedwire Transfers:
ABC Bank has a customer who wants to transfer US$10,000 to a customer at XYZ Bank, and at the same
time there happens to be a different customer at XYZ Bank who wants to transfer US$5,000 to a
different customer at ABC Bank. Because Fedwire transfers do not “net” between retail or commercial
banks, ABC Bank actually transfers US$10,000; and XYZ Bank actually transfers US$5,000. If they used a
currency transfer system which nets the currency transfers, then ABC Bank would only transfer
US$5,000 to XYZ Bank

How Fedwire Transfers Work

A large number of banks in the United States (nearly 6,000) maintain Federal Reserve
accounts.3 because so many banks have Federal Reserve accounts, it can make it easier for those banks
to execute currency transfers as Fedwire transfers. One of the advantages of Fedwire transfers is that
they are final when sent, as the funds that are transferred are “good funds” – funds that can only be
transferred from the sender if there are settled funds in their account.4

A Fedwire transfer is initiated when a drawer, the person or business “wiring” the funds, instructs their
bank to send a Fedwire transfer. The drawer’s bank debits the drawer’s account, and that bank (the
“originating bank”) sends an instruction to its Federal Reserve Bank to transfer the necessary funds to
the account of the payee (the person or business receiving the transfer) at the receiving bank. There are
twelve Federal Reserve Districts, with Federal Reserve Banks in Boston, New York City, Philadelphia,
Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.5 If
a particular Federal Reserve Bank holds the accounts of both the originating and receiving retail or
commercial banks, then that Federal Reserve Bank can debit the originating bank’s account and credit
the receiving bank’s account, and notify the receiving bank of the credit. Once the receiving bank
receives this notification, it then credits the account of the recipient.

Banks charge the sender to send a Fedwire, and some also charge the recipient to receive a Fedwire.
Fees can vary widely, with some banks not charging to send or receive Fedwire, and some charging up to
US$30 or US$40 in fees

Cross border transaction:

Megacorp banks with HSBC UK. It wants to send USD 100,000 to Michelin Tyres Banking with Citibank
New York. HSBC USA is correspondent of HSBC UK.
1. Megacorp purchase tire from Michelin and has to pay $1000. Now said amount has been
debited from Megacorp.
2. Amount get credited into Nostro Mirror account in its local currency of USA HSBC (as HSBC has
its account held by Citibank and Nostro account is in dollar)
3. Swift system will send instruction to HSBC USA as MT103 for fund transfer for single customer
credit transfer and in return send confirmation of debit and Provides balance and transaction
details of an account to the account owner( HSBC UK for its customer reference)
4. Now using Fedwire fund transfer, this will send message type 1000 as fund transfer and this will
credit Citibank, debit HSBC
5. Now Michelin will get credited the amount.

If HSBC wants to send the payment with cover method then at step3:

As there is intermediary involve as (HSBC USA), in this case to speed up the payment a separate MT 202
COV message with minimum details of credit transfer is sent to intermediary bank to settle with HSBC
UK
BACS & CHAPS:
In the US, RTGS is called Fedwire and in the UK it’s called CHAPS.

 BACS, or Bankers Automated Clearing Services, facilitates transactions from one bank account to
another free of charge. However, BACS transactions take three to five banking days. Transactions
involving salaries, loan repayments, supplier payments, and Direct Debits can be completed via the BACS
mode of payment.

 CHAPS, or Clearing House Automated Payment System, is also a form of inter-bank payment. CHAPS is
a bank-to-bank electronic payment scheme which ensures that the money will be received on the same
day, as long as it is transferred before three o’clock in the afternoon. Downside of CHAPS is that it
charges a fee for every transaction. This is the price for the speedy conclusion of your transaction.

If, however, you have a debt or bill that is due on the same day as your transaction, then you would
have to utilize CHAPS instead to insure that the transaction reaches the recipient instantly.
A BACS payment will cost a business just a few pence to make, whereas a CHAPS payment can cost £25-
£35.
3 Popular UK payment Method:
1. Bacs payments - take 3 banking days to process, but cost just a few pence to make.
2. CHAPS payments - faster than Bacs, but costs more (usually between £25- £30).
3. Faster Payments - quicker than Bacs, cheaper than CHAPS.

Bacs is the central payment system used to process several different types of electronic
payments. The vast majority of Bacs payments are Direct Debits or Direct Credits. Bacs
payments take a minimum of 3 banking days to process, and cost just a few pence to make.

What can I use Bacs payments for?

Bacs payments are used for Direct Debits and regular payments from businesses such as wages
and pensions. If a payment is time-critical, Bacs payments may not be the best option. Faster
Payments and CHAPS are quicker.

How do I make a Bacs payment? :-

Direct Debits are automatically directed through Bacs - so the customer doesn’t need to do
anything. If a customer wants to transfer money from an account that doesn’t allow Faster
Payments (using phone or internet banking), the payment will automatically be processed via
Bacs. • Security Multi-layered security is built into Bacs payment processing. Only approved
businesses are allowed to collect Direct Debits. If anything goes wrong customers can rely on
The Direct Debit Guarantee to get an immediate refund.

CHAPS (which stands for Clearing House Automated Payment System, but is nowadays only
referred to by its acronym) was launched in 1984. CHAPS is a same-day automated payment
system for processing payments made within the UK (sterling only). CHAPS payments are faster
than Bacs, reaching the recipient’s bank account the same working day.
CHAPS payments cost more than Bacs - usually between £25- £30 per transaction).

What can I use CHAPS payments for?

The most common use for CHAPS is buying property. Solicitors use CHAPS payments to transfer
the purchase price of a house between the bank accounts of those involved. CHAPS can also be
used by individuals buying or selling a high-value items such as cars, when a secure same-day
guaranteed payment is required.

How do I make a CHAPS Payment? :-

To make a CHAPS payment, customers will normally need to visit a branch of your bank, with
appropriate identification. Before making a CHAPS payment, it is good practice to check the
bank’s ‘Faster Payments’ limit, as this will be a cheaper option. • Security CHAPS users get a
 refund from their bank if they are an innocent victim of fraud. If a user gives incorrect
information and the payment goes astray, their bank must make ‘reasonable efforts’ to trace
the transaction but has no liability for getting the funds back.

 Faster Payments was launched in 2008. Faster Payments cost only slightly more than a Bacs
payment, and are much faster – taking hours rather than days. The Faster Payments Service allows
customers to make electronic payments seven days a week, 24 hours a day. The Faster Payments
Service satisfies the requirement that all internet, phone and standing order payments must be
processed by the end of the next business day.

What can I use Faster Payments for?

Faster Payments are used extensively by UK businesses and the general public alike: Businesses use
Faster Payments for payroll processing, supplier payments, expenses and last minute business-to-
business payments. The general public use Faster Payments to pay bills and standing orders, and to
make online transfers.

 
How do I make a Faster Payment? :-

Faster Payments are typically made by phone or internet banking. The amount of money that
can be transferred using Faster Payments is limited to between £10,000 and £100,000,
depending on the bank or building society. Sort codes able to receive Bacs payments can also
receive Faster Payments. The Payments Council publishes a handy Sort Code Checker that
provides this information.
Security Card readers and secure devices are sometimes used in addition to normal internet
banking login details. Some banks require the customer to enter additional details when making
online payments. As with CHAPS payments, entering details incorrectly can lead to money
ending up in a different account and being difficult to retrieve.
ISO Understanding and its Payment Message definition

PAIN stands for Payment Initiation (used in a customer to bank space)

PACS stands for Payment Clearing and Settlement (used in a bank to bank space)
CAMT stands for Cash Management (used in both space).

PAIN(pain.001.001.03)

PACS(pacs.008.001.02)

CAMT(camt.052.001.02)

Stands for?

ISO 20022 standards explain the same. The four letters and the three digits after Pacs, Camt or
Pain identify a specific message. The pain.001 message is used to send credit transfer (not
direct debit) orders or instructions from a Customer to the Bank. The pacs.008 message is used
for the clearing and settlement of credit transfers only between financial institutions. The camt
message is used for account report from banks to sender/beneficiary (customer). Cash
Management Messages» are specified as follows: Bank-to-Customer Account Report (camt.052),
Bank-to-Customer Statement (camt.053) und Bank-to-Customer Debit/Credit Notification
(camt.054).

Now if you look at all the messages carefully, you see that the digits 4, 5 and 6 are always the
same that is "001: Pain.001.001.03, Pacs.008.001.02, Pacs.004.001.02, Camt.054.001.02, and so
on. It is so because ISO 20022 has been around for a couple of years only. All the messages have
the version 001.0X. The 001 does not have an important meaning now since all the ISO 20022
messages have it at the same positions. That is why the 001 is generally ignored when the
message version is given and only the last two digits are considered. People would say: “Can
you process the pain version 2 (instead of version 1.2)?”, which would mean Pain.001.001.02.
So if you want to transfer money overseas, you just walk into your bank with the details of the
beneficiary like name, address, account number and instruct your bank to execute the
transaction. Your bank will create the pain.001.001.002 on your behalf. Then send the
pacs.008.002.01 to the clearing and settlement which will further move it to the beneficiary
bank. The beneficiary bank will send the camt.052.001.02 to the beneficiary indicating that
the account is credited with the money.
There is an issue with the beneficiary account (dormant account and many other), the
beneficiary bank will send the pacs.004.001.02 (return transaction) to the sender bank via
clearing and settlement. The same will be notified to the originator/sender via the
pain.002.001.02 by its bank.
 CustomerCreditTransferInitiation pain.001.001.08
CustomerPaymentStatusReport pain.002.001.09
CustomerPaymentReversal pain.007.001.08
pain - CustomerDirectDebitInitiation pain.008.001.07
Payments MandateInitiationRequestV05 pain.009.001.05
Initiation MandateAmendmentRequest pain.010.001.05
MandateCancellationRequest pain.011.001.05
MandateAcceptanceReport pain.012.001.05
MandateCopyRequest pain.017.001.01
MandateSuspensionRequest pain.018.001.01
CreditorPaymentActivationRequest pain.013.001.06
CreditorPaymentActivationRequestStatusReport pain.014.001.06

pacs.002.001.09
FIToFIPaymentStatusReportV09
FIToFICustomerDirectDebit pacs.003.001.07
pacs - PaymentReturn pacs.004.001.08
Payments FIToFIPaymentReversal pacs.007.001.08
Clearing and FIToFICustomerCreditTransfer pacs.008.001.07
Settlement FinancialInstitutionCreditTransfer pacs.009.001.07
FinancialInstitutionDirectDebit pacs.010.001.02
FIToFIPaymentStatusRequest pacs.028.001.02

BankServicesBillingStatemen camt.086.001.02
CustomerPaymentCancellationRequest camt.055.001.07
FIToFIPaymentCancellationRequestV camt.056.001.07
camt - Cash RequestToModifyPayment camt.087.001.05
Management BankToCustomerAccountReportV07 camt.052.001.07
BankToCustomerStatementV07 camt.053.001.07
BankToCustomerDebitCreditNotification camt.054.001.07
AccountReportingRequest camt.060.001.04

THE MEANING OF OMNICHANNEL

BANKING

Omni channel is about making the same set of services available to customers across all the
channels, both digital and offline.

Example in Onboarding
Omnichannel makes the onboarding process painless for the customer and
facilitates laser-thin marketing activities. Here’s how it works:

1. Amy sees a Facebook ad that promotes credit cards at Alligator Bank (the name is
fictional). She is interested and proceeds to the bank’s website. Amy starts her online
application directly from the smartphone (yes, customers want full-cycle online
onboarding).
2. Thanks to Google, most of the fields in the application form are filled in automatically
with just a few taps. Amy types in any missing information.
3. In the process, she provides her contact details, but then has second thoughts
and decides to terminate the application.
4. The system created a temporary profile for Amy that is already stored within the
omnichannel platform.
5. Two days later, Amy makes up her mind and arrives at the bank’s branch to apply for
the credit card again. The manager at the bank starts by asking Amy’s phone number.
6. This number matches a temporary profile that was created two days ago. Amy has
already provided all the information online, so it takes only a few minutes and a couple
of signatures to finish the application.
7. Bank will send her a new card via post. The expected delivery time is two business days,
and Amy has the order number to track the delivery.
8. In fact, Amy could have completed her registration online using a digital signature. With
omnichannel, the result would be the same across all touchpoints including bank’s
website, branches, and mobile application.
9. In case Amy didn’t return to finish her application in three days, omnichannel banking
platform sends an automatic notification to a responsible manager. The manager can
approach Amy again: online, by phone, or via a messaging app.
10. That last stage can be further robotized with automated emails, messenger bots, etc.

Example in Operations
1. Amy wants to increase the daily online spending limit on her card. She opens the
Alligator bank’s app, taps “Online support”, and types in her question.
2. A chatbot uses its NLP algorithms to identify Amy’s question. As the request is fairly
simple, it sends Amy thorough instructions on how she can change the online spending
limit via the app. Most bank customers ask nearly identical questions, so chatbots can
solve these issues with zero or very little human interaction.
3. If the bot doesn’t have a ready answer, it can at least extract keywords from the request
to categorize the question for the customer support team.
4. As Amy taps “Talk to a branch manager”, a human bank’s representative takes over the
online conversation.
5. Chatbot has already categorized the question, so the customer support manager has
some basic information about Amy’s issue. There is no need for a client to repeat it
again.
 6. After a quick chat with the customer support, Amy decides she still needs a live
consultation with a banking manager.
7. All the data about Amy’s request is automatically synced via the banking platform.
When 30 minutes later Amy comes to the office, branch employees already know she
has an open issue and the can resolve the problem in a matter of minutes.

https://www.n-ix.com/omnichannel-banking-meaning-examples-benefits-challenges/#