Payments Interview Questions

1. What is SWIFT?
- Answer: SWIFT stands for Society for Worldwide Interbank Financial Telecommunication. It is a
cooperative of banks that provide the infrastructure and standards for the exchange of payment messages,
especially in the cross-border space. SWIFT has a proprietary message type called MT messages.

2. What are the differences between SWIFT and SEPA?

- Answer: SEPA stands for Single Euro Payments Area, created by the European Union to facilitate
payments within the EU. SEPA deals with only payments in EURO currency, using a version of the ISO20022
standard for the exchange of funds. Compare it with SWIFT.

3. What are the message types that you know?

- Answer: The most popular ones are SWIFT MT, SEPA PACS, PAIN, and CAMT, SFMS (India), Fedwire
Funds Service message format.

4. What are NOSTRO, VOSTRO, and LORO accounts?

- Answer: [Link to more details](http://www.paymentsdomain.com/2021/05/29/accounting-entries-in-
payments/)

5. What are the different series of MT messages you know?

- Answer: For payments, it’s generally 1 series, 2 series, and 9 series.

6. What does MT stand for?

- Answer: MT stands for Message Type. It is the proprietary message standards developed by SWIFT.

7. What is an MT103?
- Answer: It is a customer credit transfer payment message used to transfer funds bank customer funds.
[More details](https://www.youtube.com/watch?v=iWcZlaDGYIU)

8. What is the difference between serial and cover methods?

- Answer: [Link to explanation](https://www.paiementor.com/swift-serial-and-cover-payments/)

9. What is RMA and accounting relationship?

- Answer: [Link to details](http://www.paymentsdomain.com/2021/06/18/misc-payment-concepts/)

10. Explain the full flow of an MT103 when payment is sent via. Serial method?
- Answer: [Link to analysis](https://www.paiementor.com/swift-mt103-serial-payment-analysis-1-3/)

11. Explain the full flow of an MT103 when payment is sent via. Cover method?
- Answer: [Link to analysis](https://www.paiementor.com/swift-mt103-202-cover-payment-analysis-
part-1/)

12. When are the following message types used MT200, MT201, MT202, MT202 COV, MT203, MT210?
- Answer: MT200 – Is a message used by a bank to transfer funds from one of its accounts to another
account of theirs with another banks. MT201 – It is multiple MT200s in a single message MT202 – This
message is used by a bank to send money to another bank. All parties should be banks. MT202COV – It is
an MT202 that is used to cover funds of an underlying payment message like an MT103 Announcement.
MT203 – Multiple 202s MT210 – It is a notice to the receiver that the funds are on the way.

13. What is the difference between MT202 and MT202 COV? Functionally and field wise
- Answer: MT202COV covers funds of an underlying payment while MT202 is not. MT202 will have
tag21 data as “Nonref” or empty while MT202COV will have the reference (tag20) of the underlying payment
in tag21. MT202COV will contain MT103 details.
 14. What is an MT101? Is it mandatory?
- Answer: MT101 is an instruction message sent by the customer to the bank to initiate a payment. It is
not mandatory but is recommended.

15. How will you (as a bank) send a payment to the beneficiary’s bank if there is no RMA?
- Answer: Route the payment using the serial method via your correspondent.

16. Explain the accounting entries of payment flow?

- Answer: [Link to details](http://www.paymentsdomain.com/2021/05/29/accounting-entries-in-
payments/)

17. What are the different CSMs you have worked in?
- Answer: Based on your experience

18. What is RTGS and NET settlement?

- Answer: [Link to details](http://www.paymentsdomain.com/2021/05/14/parties-in-a-payment-
system/)

19. What are instant payments?

- Answer: Payments that are executed and completed within a matter of seconds. Example SCT Inst
(Europe), UPI (India)

20. What is the equivalent of MT101, MT103, MT202 in SEPA?

- Answer: MT101 – Pain.001, MT103 – Pacs.008, MT202 – Pacs.009

21. Can you explain the flow of messages for a positive scenario in SEPA?
- Answer: [Link to details](http://www.paymentsdomain.com/2021/08/21/sct-happy-path/)

22. Can you explain the recall flow in SEPA?

- Answer: [Link to details](https://www.paiementor.com/the-messages-exchanged-in-the-sepa-credit-
transfer-scheme/)

23. What is the equivalent of MT940, MT941, MT942 in SEPA?

- Answer: MT940- Camt.053 , MT941 and MT942 – Camt.052

24. What are MT910s and MT900s?

- Answer: MT910 – Confirmation of credit is a message sent by the bank to its customer informing
money is credited to their account. MT900- Confirmation of debit. It is a message sent by the bank to its
customer informing money is debited from their account.

25. Can you explain about SWIFT T copy and Y copy services?
- Answer: [Link to details](https://www.swift.com/swift-resource/13521/download)

26. What is the input credit file in SEPA?

27. Can you explain SEPA direct debit flow?

- Answer: [Link to details](https://www.paiementor.com/iso-20022-messages-exchanged-in-the-sdd-
schemes/)

28. What are the different charges in a SWIFT MT103 message?

- Answer: [Link to details](http://www.paymentsdomain.com/2021/06/12/charges-and-forex-fx/)

29. What are the different client channels from which payments are received?
- Answer: Broadly, client channels are classified into online and offline channels. There are dedicated
channels for corporate customers and private customers. Examples of online channels include Netbanking
and mobile banking portals. Offline channels include Bank branch.
 30

. What are the different checks performed in a payment engine?

- Answer: [Link to details](http://www.paymentsdomain.com/2021/06/05/payment-engines/)

31. What is STP? and 4EV?

- Answer: [Link to details](http://www.paymentsdomain.com/2021/06/05/payment-engines/)

32. Explain the sanction checks performed during payment processing.

33. What is SSI?

- Answer: SSI stands for Standing Settlement Instruction. These are agreements with other banks on
how to settle funds. It will tell you who the EUR correspondent of the receiver bank is, so that you can route
the payment with them. I will explain why it’s done this way.

34. What is SWIFT REF Service?

- Answer: These are a set of services provided by SWIFT. Kindly refer to SWIFT’s official website for the
latest details.

35. What is open banking?

- Answer: It is a concept where banks have to open up customer’s data to third parties. These third
parties can provide different services to the customers after getting consent from the customer to access
their account.

36. Who are indirect participants of a settlement system?

- Answer: [Link to details](http://www.paymentsdomain.com/2021/07/25/sepa-clearing-and-
settlement/)

37. Can you explain the structure of a BIC code?

- Answer: [Link to details](http://www.paymentsdomain.com/2021/06/18/misc-payment-concepts/)

38. Can you explain the different blocks of a SWIFT message?

- Answer: [Link to details](https://www.paiementor.com/swift-mt-message-structure-blocks-1-to-5/)

39. What is ISO20022 and can you explain the advantages of its use?
- Answer: There are three major advantages 1. Rich data 2. Increased automation 3. Interoperability

40. Can you explain the reject/return flow?

- Answer: If a credit transfer message is received from a bank and it has incorrect data or if the
receiving bank is not able to complete the payment processing then the payment is rejected and a
reject/return message is sent. If that payment is not booked then reject is sent but if the payment is booked
then a return message is sent.

41. What are MT103 rejects and return?

- Answer: The concept is the same as question 40 but Tag72 field will contain the code word /REJT or
/RETN

42. What are the different types of charges in payments and can you explain in detail about them?
- Answer: [Link to details](http://www.paymentsdomain.com/2021/06/12/charges-and-forex-fx/)

43. Can you explain about the FX functionality in payment processing?

- Answer: [Link to details](http://www.paymentsdomain.com/2021/06/12/charges-and-forex-fx/)