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Payments Glossary

165 terms.

3D Secure. A security protocol that adds an authentication step to online card payments, usually by asking the cardholder to confirm the payment with their bank. Version two supports risk based authentication and biometric checks. It shifts liability for fraud and helps meet strong customer authentication rules. See also: SCA, Authorisation, Chargeback.

3RI. Three domain secure requestor initiated, a 3D Secure flow where the merchant requests authentication without the cardholder being present, for example for a subscription renewal. The merchant sends the request to the issuer, which may authenticate using stored data. It supports recurring and merchant initiated payments. See also: 3D Secure, SCA, Authorisation.

A2A. Application to application, a mode of connecting systems directly so they exchange messages without human input. In payment systems, A2A uses ISO 20022 XML messages sent over secure networks. Banks use A2A for high volume straight through processing and for automated status reporting. See also: U2A, BAH, ISO 20022.

Acquirer. A bank or licensed institution that processes card payments for merchants and receives transaction funds from card schemes on their behalf. It underwrites merchant risk, provides settlement, and manages chargebacks. The acquirer contracts with the merchant and connects to the scheme network for authorisation and clearing. See also: Issuer, Scheme, Interchange.

Acquirer markup. The margin an acquirer adds to interchange and scheme fees when pricing merchant services. It covers the acquirer operating costs, risk and profit. Merchants see the total merchant service charge, which combines interchange, scheme fees and acquirer markup into one rate or a blended rate. See also: Interchange, Scheme fee, Acquirer.

Addressable BIC. A BIC that is addressable in a payment system, meaning the system can route payments to the institution that holds it, either directly or through another participant. Addressable BICs are listed in system directories, and banks use them to check whether a beneficiary bank can be reached. See also: Multi-addressee, Direct participant, Reachable party.

Aggregator. A payment provider that lets many small merchants accept card payments under the aggregator master merchant account, without each merchant holding its own acquirer contract. The aggregator underwrites, onboards and settles merchants, and it manages risk and chargebacks on their behalf. See also: PSP, Gateway, Acquirer.

AISP. Account information service provider, a licensed provider that reads account information from one or more banks with customer consent, under open banking rules. It aggregates balances and transactions for budgeting, lending or account aggregation. It never moves money or initiates payments. See also: PISP, Open banking, PSD2.

AML. Anti money laundering, the set of laws, rules and controls that stop criminals from hiding the proceeds of crime through the financial system. Banks apply customer due diligence, transaction monitoring and suspicious activity reporting. AML controls apply to payments, accounts and correspondent relationships. See also: KYC, Sanctions screening, Fraud scoring.

API. Application programming interface, a set of rules that lets one software system call another system to request data or trigger an action. Payment APIs let merchants, corporates and fintechs send payment instructions, check balances and receive status updates. Good APIs use standard formats and secure authentication. See also: Webhook, Idempotency, Open banking.

Authorisation. Approval by the issuer for a card transaction to proceed, confirming the card is valid and funds or credit are available. Authorisation reserves the amount but does not move money. The merchant later captures the amount, and the authorisation may expire if capture does not happen in time. See also: Capture, 3D Secure, Chargeback.

BAH. Business Application Header, the header block that precedes an ISO 20022 business message and carries routing and tracking data. It holds the message type, sender, receiver, creation time and business service. Systems use the BAH to route messages without opening the business payload. See also: head.001, A2A, pacs.008.

Bank Operation Code. A code in field 23B of an MT103 that tells the receiving bank how to handle the transfer, such as CRED for a normal credit transfer, SPAY for a payment, or CRTS for a cheque related transfer. It guides processing priority and the way charges and settlement are applied. See also: MT103, STP, Charge bearer.

BIC. A business identifier code that uniquely identifies a bank or financial institution in international payments. It has eight or eleven characters and encodes the bank, country and location. Banks use the BIC to route SWIFT messages and identify the debtor agent, creditor agent and intermediaries. See also: IBAN, Addressable BIC, SWIFT gpi.

Bilateral netting. Netting between two banks, where their mutual obligations are offset and only the net amount is settled. It is used in correspondent banking and in direct agreements between banks. Bilateral netting reduces the number of payments and the funds each bank must hold. See also: Netting, Multilateral netting, Nostro.

Bill of exchange. A written order by one party instructing another party to pay a stated amount to a named person on a stated date. It is a negotiable instrument used in trade finance, where the drawee accepts the bill and becomes liable to pay. Bills can be discounted before maturity. See also: Promissory note, Negotiable instrument, Documentary credit.

Break. A difference found during reconciliation between two records that should agree, such as a bank statement and a ledger. Breaks arise from timing differences, missing entries, wrong amounts or posting errors. Each break must be investigated, aged and resolved, with older breaks escalated to management. See also: Reconciliation, Exception, Nostro reconciliation.

camt.025. An ISO 20022 receipt message that confirms the outcome of a liquidity transfer or other instruction. It states whether the instruction was accepted or rejected, with a reason code if needed. Banks use it to confirm that a camt.050 transfer was posted successfully. See also: camt.050, Liquidity transfer, pacs.002.

camt.029. An ISO 20022 message that reports the resolution of an investigation, such as a cancellation request or a claim of non receipt. It states whether the investigation was accepted, rejected or completed, with reason codes. Banks use it to close cases and inform the requesting party. See also: camt.056, Recall, Exception.

camt.050. An ISO 20022 liquidity credit transfer message used to move funds between accounts of the same participant, for example from a main cash account to a dedicated cash account in T2. It carries the amount, the source and destination accounts, and the settlement date. See also: camt.025, Liquidity transfer, MCA.

camt.053. An ISO 20022 bank to customer statement message that lists all entries posted to an account over a statement period, with opening and closing balances. Corporates use it for daily reconciliation, matching each bank entry to their own ledger using booking date, value date and references. See also: camt.054, Reconciliation, Nostro reconciliation.

camt.054. An ISO 20022 bank to customer debit credit notification message that reports individual entries as they are posted. It gives near real time advice of credits and debits, with references and remittance data. Corporates use it to update cash positions and trigger reconciliation without waiting for a statement. See also: camt.053, Reconciliation, Break.

camt.056. An ISO 20022 message used to request cancellation of a payment instruction that was already sent. It is used for recalls, where the sender asks the receiving bank to return the funds. The request must state a valid reason, such as duplicate, technical error or fraud. See also: Recall, pacs.004, camt.029.

Canonical data model. A single agreed data model used across systems in an organisation, so each system maps its own format to the common model. It reduces the number of translations between systems and makes integration simpler. In payments, the canonical model often follows ISO 20022 structures and naming. See also: BAH, API, Event-driven.

Capture. The step in a card transaction where the merchant collects the authorised amount from the issuer, usually when goods are shipped. Capture triggers clearing and settlement, and the cardholder account is debited. A capture may be for the full authorised amount or a lower amount. See also: Authorisation, Settlement, Presentment.

CBPR+. Cross Border Payments and Reporting Plus, the SWIFT market practice for ISO 20022 cross border payments. It defines how banks must use pacs.008, pacs.009, pacs.002 and related messages, including mandatory fields, codes and the UETR. For cross-border payments, pacs.008 replaced MT103 and pacs.009 replaced MT202 when coexistence ended on 22 November 2025. CBPR+ covers cross-border payments and reporting only; it does not cover Category 7 trade finance, Category 5 securities, Category 3 treasury or Category 9 cash management. See also: Market practice, pacs.008, UETR.

Charge bearer. A code that states who pays the charges for a payment. In ISO 20022 the values are DEBT for debtor, CRED for creditor, SHAR for shared and SLEV for service level. In MT messages the codes are OUR, BEN and SHA. The bearer drives fee deduction at each bank. See also: DEBT, CRED, SHAR.

Chargeback. A dispute raised by a cardholder through the issuer to reverse a card payment, for example for fraud, non delivery or a duplicate charge. The issuer debits the acquirer, which debits the merchant, unless the merchant provides evidence to defend the transaction. Chargebacks carry fees and affect merchant risk. See also: Presentment, Authorisation, Refund.

Circuit breaker. A resilience pattern that stops calling a failing service after a set number of failures, giving it time to recover. While open, the circuit breaker returns an error immediately instead of waiting for a timeout. It prevents cascading failures and protects the calling system from overload. See also: Retry, Dead-letter queue, Event-driven.

Clearing. The process of exchanging payment instructions between banks and calculating what each bank owes the others. Clearing collects transactions, nets amounts where agreed, and prepares settlement files. It happens before settlement and may run in batches or in real time, depending on the payment system. See also: Settlement, Netting, RTGS.

CLM. Central Liquidity Management, the T2 component that manages central bank operations and liquidity for Eurosystem participants. It holds main cash accounts, processes monetary policy operations, and supports liquidity transfers to RTGS and TIPS accounts. Banks use CLM to centralise euro liquidity. See also: T2, MCA, Liquidity transfer.

CLRG. Clearing System, a settlement method code in ISO 20022 meaning settlement is made through a clearing system. The clearing system nets or settles the payment between participants and moves funds on their behalf. Banks use CLRG for payments settled through a domestic or regional clearing house. See also: Clearing, Settlement, INGA.

Correlation ID. A unique identifier assigned to a request and carried through every system and message in a flow, so logs and events can be linked together. In payments it connects the API call, the payment instruction and the status updates. It is essential for tracing and debugging across services. See also: Idempotency, Webhook, Event-driven.

Correspondent banking. A service where one bank holds accounts for another bank so the second bank can make payments in currencies or countries where it has no branch. The correspondent provides settlement, clearing and payment services. The relationship relies on due diligence, account agreements and agreed cut off times. See also: Nostro, Vostro, RMA.

COVE. Cover, a settlement method code in ISO 20022 meaning the payment is settled by a separate cover message. The customer instruction and the funds travel on different routes, and the cover message carries the funds. The beneficiary bank matches the cover to the customer instruction before crediting. See also: Cover payment, CLRG, INGA.

Cover payment. A payment method where the customer instruction travels one route while the funds travel separately as a bank to bank cover message. The beneficiary bank receives both parts and matches them before crediting the beneficiary. The method protects customer data and allows faster settlement through a different route. See also: Serial payment, MT202 COV, pacs.009.

CRDM. Common Reference Data Management, a Eurosystem service that stores reference data shared across market infrastructure services. It holds data on participants, accounts, users and access rights. Changes made in CRDM are propagated to T2, TIPS and other services, so banks maintain reference data once. See also: ESMIG, T2, MCA.

CRED. A charge bearer code in ISO 20022 meaning the creditor pays all charges for the payment. Charges are deducted from the amount before it is credited to the creditor, so the creditor receives less than the instructed amount. CRED is used when the beneficiary agrees to bear all costs. See also: DEBT, SHAR, Charge bearer.

Credit Memorandum Balance. A balance type in TARGET2 that records a credit memorandum, used in the old TARGET2 system to manage liquidity and settlement. It is a historical concept from the pre T2 system, and banks migrating to T2 should use main cash accounts and dedicated cash accounts instead. See also: MCA, DCA, T2.

Creditor. The party that is owed money and receives a payment, such as a supplier, a seller or a service provider. In ISO 20022 messages the creditor is the beneficiary, with name, address and account details. The creditor agent is the bank that holds the creditor account. See also: Debtor, Mandate, Remittance information.

Cut-off. The latest time a bank or payment system accepts a payment instruction for processing on a given value date. Instructions received after the cut off are processed on the next business day or rejected. Cut off times vary by currency, system and channel, and customers must meet them. See also: Value date, Execution date, RTGS.

DCA. Dedicated Cash Account, an account held in a specific T2 service, such as RTGS or TIPS, for settlement of payments in that service. A bank funds its DCA from its main cash account and uses it to settle payments in that service. Each DCA is dedicated to one service only. See also: MCA, TIPS, RTGS.

Dead-letter queue. A queue that holds messages that could not be processed after repeated retries, so they are not lost. Operations teams inspect the dead letter queue, fix the cause, and reprocess or discard each message. It prevents failed payments from disappearing silently in event driven systems. See also: Retry, Circuit breaker, Event-driven.

DEBT. A charge bearer code in ISO 20022 meaning the debtor pays all charges for the payment. The debtor agent deducts charges from the debtor account or adds them to the amount, and no charges are deducted from the amount received by the creditor. DEBT is used when the sender agrees to bear all costs. See also: CRED, SHAR, Charge bearer.

Debtor. The party that owes money and makes a payment, such as a buyer, an employer or a borrower. In ISO 20022 messages the debtor is the ordering customer, with name, address and account details. The debtor agent is the bank that holds the debtor account and sends the payment. See also: Creditor, Mandate, pain.001.

Direct participant. A bank or institution that holds an account in a payment system and sends and receives payments directly. Direct participants settle in central bank money and are bound by system rules. They may also act for indirect participants and reachable parties that do not hold accounts. See also: Indirect participant, Reachable party, RTGS.

Documentary credit. A letter of credit, a bank undertaking to pay a seller when the seller presents documents that comply with the credit terms. It is used in international trade to reduce payment risk for both buyer and seller. Documentary credits are governed by UCP 600 rules. See also: Standby LC, UCP 600, Bill of exchange.

E-mandate. An electronic mandate for direct debit, created and signed online by the debtor through a secure channel, such as internet banking. It replaces a paper mandate and is stored electronically by the creditor or a mandate service. E-mandates speed onboarding and reduce paper handling errors. See also: Mandate, SDD, Debtor.

EndToEndId. An end to end identification assigned by the initiating party that stays unchanged through the whole payment chain. Debtor, creditor and all intermediary banks use the same value to refer to the payment. It supports tracking, reconciliation and customer queries across systems. See also: InstrId, UETR, pacs.008.

ESMIG. Eurosystem Single Market Infrastructure Gateway, the single entry point for Eurosystem market infrastructure services such as T2, TIPS and securities settlement. Participants connect once through ESMIG instead of maintaining separate connections to each service. It supports both application to application and user to application access. See also: T2, A2A, U2A.

Event-driven. An architecture where systems react to events, such as a payment received or a status changed, rather than polling for updates. Events are published to a bus or queue, and interested services subscribe to them. Event driven design supports real time processing and loose coupling between services. See also: Webhook, Dead-letter queue, Canonical data model.

Exception. A payment that cannot be processed normally and needs manual handling, investigation or repair. Exceptions arise from missing data, failed screening, account errors or system faults. Operations teams work exception queues, contact customers or banks, and record the resolution for audit and reporting. See also: Repair, Break, Reconciliation.

Execution date. The date on which the bank executes a payment instruction, debiting the debtor account and sending the message onward. It is set by the customer in a pain.001 file or agreed at the branch. The execution date drives the value date, subject to cut off times and business days. See also: Value date, Cut-off, pain.001.

Finality. The point at which a payment settlement becomes irrevocable and unconditional, so it cannot be reversed by the payer or the system. Finality is defined by system rules and law, and it gives the receiving bank certainty that funds are good. RTGS systems provide immediate finality. See also: Settlement, RTGS, Irrevocable.

Fraud scoring. A risk score assigned to a payment based on factors such as amount, location, device, velocity and customer history. A high score may trigger a step up check, a hold or a rejection. Fraud scoring uses rules and models, and banks tune thresholds to balance fraud loss against customer friction. See also: Velocity check, 3D Secure, Authorisation.

FX. Foreign exchange, the conversion of one currency into another at an agreed exchange rate. FX is needed when a payment is instructed in one currency and settled or credited in another. Banks apply the rate at execution, disclose any margin, and record the rate for reconciliation and customer reporting. See also: Value date, Liquidity, Charge bearer.

Gateway. A service that connects a merchant website or app to payment networks and acquirers. It encrypts card data, routes authorisation requests, and returns the result to the merchant. Gateways may also offer tokenisation, fraud tools and support for multiple payment methods in one integration. See also: PSP, Aggregator, Tokenisation.

gpi. SWIFT global payments innovation, a service that improves cross border payments with end to end tracking, faster settlement and transparent fees. Banks send status updates using pacs.002 and the UETR, so customers can see where a payment is and what charges were applied. gpi is now part of standard SWIFT services. See also: UETR, pacs.002, Cover payment.

Host to host. A direct file or API connection between a corporate customer system and its bank, used to send payment files and receive status reports. Host to host connections use secure protocols and agreed formats, such as pain.001 files. They support high volume bulk payments without manual entry. See also: pain.001, API, Payment hub.

IBAN. An international bank account number that identifies a customer account in a standard format across countries. It includes a country code, check digits, bank code and account number. Banks validate the check digits before sending a payment, which prevents many format errors and misrouting. See also: BIC, Creditor, Debtor.

Idempotency. The property that repeating the same request has the same effect as sending it once. In payments, an idempotency key lets a client safely retry a request after a timeout without creating a duplicate payment. The server stores the key and returns the original result for a repeated request. See also: Retry, Correlation ID, API.

INDA. Instructed Agent, a settlement method code in ISO 20022 meaning settlement is made through the instructed agent account. The instructed agent credits its account and settles the payment on behalf of the instructing agent. Banks use INDA when the instructed agent holds the settlement account. See also: INGA, COVE, CLRG.

Indirect participant. A bank or institution that uses a payment system through a direct participant, without holding its own settlement account. The direct participant sends and receives payments on its behalf and settles them through its own account. Indirect participation lowers the cost of joining a system. See also: Direct participant, Reachable party, Addressable BIC.

INGA. Instructing Agent, a settlement method code in ISO 20022 meaning settlement is made through the instructing agent account. The instructing agent debits its account with the instructed agent to fund the payment. Banks use INGA when the instructing agent holds the settlement account. See also: INDA, COVE, CLRG.

InstrId. An instruction identification assigned by the instructing party to identify one payment instruction uniquely. It is used within the instructing agent systems and in status reports to match a status to the original instruction. It differs from the end to end identification, which stays constant. See also: EndToEndId, UETR, pacs.008.

Interchange. A fee paid by the acquirer to the issuer for each card transaction, set by the card scheme. It compensates the issuer for handling the transaction, funding the interest free period and managing fraud risk. Interchange varies by card type, channel and region, and it is a major cost for merchants. See also: Scheme fee, Acquirer markup, Presentment.

Intraday liquidity. Cash available to a bank during the business day to settle payments as they fall due. Intraday liquidity comes from account balances, incoming payments and central bank facilities. Banks monitor it in real time, because a shortfall can delay settlement and create queues in RTGS systems. See also: Liquidity, RTGS, MCA.

Irrevocable. A payment or instruction that cannot be cancelled or reversed once it has been made, except by agreement of all parties or by a court order. Irrevocability protects the beneficiary and the settlement system. Banks must warn customers that some payment types become irrevocable after execution. See also: Finality, Recall, Settlement.

ISO 20022. An international standard for financial messaging that defines XML message formats for payments, securities and trade. ISO 20022 messages use structured data, clear field names and versioned schemas. Banks use it for CBPR+, SEPA, T2, CHAPS and Fedwire, replacing older MT formats. See also: pacs.008, BAH, Market practice.

ISP98. International Standby Practices 98, the set of rules published by the International Chamber of Commerce that governs standby letters of credit. It defines the undertaking, presentation, examination and payment rules for standby credits. Banks use ISP98 as an alternative to UCP 600 for standby credits. See also: Standby LC, UCP 600, Documentary credit.

Issuer. A bank or licensed institution that issues payment cards to customers and holds their accounts. It authorises transactions, debits cardholder accounts, and manages credit limits and fraud controls. The issuer pays the acquirer through the scheme and bills the cardholder for purchases and cash advances. See also: Acquirer, Scheme, Authorisation.

KYC. Know your customer, the process of verifying a customer identity, understanding their business and assessing their risk before opening an account or providing services. KYC collects identity documents, ownership data and expected activity. Banks refresh KYC periodically and apply enhanced checks to higher risk customers. See also: AML, PEP, Sanctions screening.

LEI. A legal entity identifier, a twenty character code that uniquely identifies a legal entity taking part in financial transactions. Regulators use it to identify counterparties, monitor systemic risk and link transaction reports. Banks collect the LEI of corporate customers for reporting and screening. See also: KYC, AML, Creditor.

Liquidity. Cash or assets that a bank can use immediately to meet payment obligations. Banks manage liquidity by forecasting inflows and outflows, funding nostro and settlement accounts, and using central bank facilities. Insufficient liquidity can delay settlement, so banks monitor positions through the day. See also: Settlement, Nostro, Liquidity transfer.

Liquidity transfer. A movement of funds between accounts held by the same participant to manage liquidity, for example from a main cash account to a dedicated cash account. In T2, liquidity transfers use camt.050 messages and are confirmed by camt.025 receipts. They do not involve a customer payment. See also: camt.050, camt.025, MCA.

Mandate. An authorisation given by a debtor to a creditor to collect payments from the debtor account by direct debit. The mandate states the creditor, the debtor account and the terms of collection. In SEPA, the mandate is stored by the creditor and referenced in each direct debit collection. See also: E-mandate, SDD, Creditor.

Market practice. An agreed way of using a message standard in a particular market or community, covering field usage, codes and validation rules. Market practice guides, such as CBPR+ usage guidelines, tell banks how to fill each field. Following market practice is essential for straight through processing. See also: CBPR+, STP, pacs.008.

MCA. Main Cash Account, an account held in the central liquidity management service of T2. It is the central account for a participant, used for central bank operations, reserve management and liquidity transfers to dedicated cash accounts. Banks monitor the MCA to manage their euro liquidity. See also: DCA, CLM, T2.

MT101. A SWIFT message a corporate customer sends to its bank to request execution of one or more payment instructions. It is the MT equivalent of pain.001 and is used for bulk payment initiation. The bank validates the file and creates MT103 messages to execute each payment. See also: pain.001, MT103, MT202.

MT103. A SWIFT message that carries a single customer credit transfer instruction from one bank to another. It names the ordering customer, the beneficiary, the amount, the currency and the value date. Banks use it for cross border customer payments, and its successor in ISO 20022 is pacs.008. See also: pacs.008, Serial payment, Cover payment.

MT103 REMIT. A variant of MT103 used for remittance payments, where the payment is for a personal or family transfer, often with cash payout. It carries remittance details and may be used for payments to countries with specific remittance rules. The variant helps banks apply the correct screening and reporting. See also: MT103, Remittance information, STP.

MT103 STP. A variant of MT103 for straight through processing, with restricted fields and structured data to allow fully automated handling. It is used for low value customer payments where the data is complete and standard. The STP variant reduces manual repair and speeds processing through the chain. See also: MT103, STP, pacs.008.

MT200. A SWIFT message a bank sends to its own branch or to another bank to request a transfer of its own funds between its own accounts. It is used for internal liquidity movement and funding. The message names the accounts and the amount, and it is settled through correspondent or central bank accounts. See also: MT202, Liquidity transfer, MT201.

MT201. A SWIFT message a bank sends to request multiple transfers of its own funds to several banks or accounts in one message. It is used for bulk internal funding and liquidity distribution. Each transfer in the message names its own destination account and amount, and settlement follows normal interbank routes. See also: MT200, MT202, Liquidity transfer.

MT202. A SWIFT message that carries a general financial institution transfer between banks with no customer beneficiary named. Banks use it to move their own funds, fund nostro accounts, and settle interbank obligations. It is the bank to bank leg that often provides cover for a customer payment. See also: MT202 COV, pacs.009, Settlement.

MT202 COV. A variant of MT202 used specifically as the cover for an MT103 customer payment. It moves the funds between banks while the MT103 carries the customer instruction on a separate route. The beneficiary bank matches the cover to the MT103 using references before it credits the beneficiary account. See also: Cover payment, MT103, MT202.

MT203. A SWIFT message a bank sends to request multiple general financial institution transfers to several banks in one message. It is the bulk version of MT202, used for interbank payments to many beneficiaries. Each transfer names its own beneficiary institution, amount and value date. See also: MT202, MT200, Settlement.

MT210. A SWIFT message a bank sends to advise another bank that it will receive funds, so the receiving bank can expect the credit and plan liquidity. It is a notice of receipt, not a payment instruction, and it names the amount, currency and value date of the expected funds. See also: MT900, MT910, MT202.

MT400. A SWIFT message used to advise a bank of the collection of a documentary credit or a bill, and to request payment or acceptance. It is used in trade finance to notify the presenting bank of the outcome of a collection. The message carries the collection reference and the amount. See also: Documentary credit, MT700, Bill of exchange.

MT700. A SWIFT message a bank sends to issue a documentary credit, stating the terms under which it will pay the beneficiary on presentation of complying documents. It names the applicant, beneficiary, amount, expiry and required documents. It is the core message for letters of credit. See also: Documentary credit, UCP 600, MT400.

MT900. A SWIFT message a bank sends to confirm a debit to an account, advising the account holder that funds have been taken. It is a confirmation of debit, used for nostro and customer accounts. The message names the account, amount, currency and value date of the debit. See also: MT910, MT940, camt.054.

MT910. A SWIFT message a bank sends to confirm a credit to an account, advising the account holder that funds have been received. It is a confirmation of credit, used for nostro and customer accounts. The message names the account, amount, currency and value date of the credit. See also: MT900, MT940, camt.054.

MT940. A SWIFT message that provides a customer statement, listing all entries posted to an account over a period, with opening and closing balances. It is the MT equivalent of camt.053 and is used for account reconciliation. Banks send MT940 statements daily or at agreed intervals. See also: MT950, camt.053, Reconciliation.

MT941. A SWIFT message that provides a balance report, stating the current balance of an account at a given time. It is used for intraday liquidity monitoring and cash management. The message names the account, the balance and the time of the report, without listing individual entries. See also: MT942, MT940, Liquidity.

MT942. A SWIFT message that provides an interim transaction report, listing entries posted to an account since the last statement. It is used for intraday monitoring and reconciliation between statements. The message lists each entry with amount, value date and reference, and it gives a running balance. See also: MT941, MT940, camt.054.

MT950. A SWIFT statement message that provides a statement of account, similar to MT940 but with a different format and usage in some markets. It lists entries, balances and references for reconciliation. Banks use MT950 where the local market practice or the customer agreement requires it. See also: MT940, camt.053, Reconciliation.

Multi-addressee. A payment system arrangement where one participant, usually a bank, acts as the addressee for payments to several other institutions, such as its branches or subsidiaries. The system routes payments addressed to those institutions through the multi addressee participant, which forwards them internally. See also: Addressable BIC, Direct participant, Reachable party.

Multilateral netting. Netting across many participants in a clearing system, where each participant settles only its net position against the system. The clearing house calculates each net debit or credit from all transactions in the cycle. It reduces liquidity needs and settlement volumes across the whole system. See also: Netting, Bilateral netting, Clearing.

Negotiable instrument. A document, such as a cheque, bill of exchange or promissory note, that can be transferred from one person to another, with the holder having the right to receive payment. Transfer is by delivery or endorsement. Negotiable instruments are governed by national law and trade practice. See also: Bill of exchange, Promissory note, Documentary credit.

Netting. The process of offsetting mutual payment obligations between banks so only the net amount is settled. Netting reduces the number of payments and the liquidity needed. It can be bilateral between two banks or multilateral across many participants in a clearing system. See also: Multilateral netting, Bilateral netting, Clearing.

Nostro. An account that a bank holds with another bank, usually in a foreign currency, to settle payments in that currency. The term means our account with you. Nostro balances fund outgoing payments, and banks monitor them daily to avoid failed settlement caused by insufficient funds. See also: Vostro, Correspondent banking, Reconciliation.

Nostro reconciliation. Reconciliation of a bank nostro account against the statement received from the correspondent bank. Operations teams match each nostro entry to a statement entry, investigate breaks, and confirm the balance. Daily nostro reconciliation is a key control for detecting errors and fraud. See also: Nostro, Reconciliation, Break.

One leg out. A cross border payment where only one leg is inside a payment system, such as SEPA, and the other leg is outside it. For example, a euro payment from a SEPA bank to a bank outside SEPA is one leg out. The system rules apply to the internal leg, and correspondent banking covers the external leg. See also: SCT, Correspondent banking, CBPR+.

Open banking. A system where banks share customer account data and payment services with licensed third parties through secure APIs, with customer consent. It enables account aggregation, payment initiation and new financial products. Open banking rules set standards for security, consent and liability. See also: API, PISP, AISP.

pacs.002. An ISO 20022 message one financial institution sends to another to report the status of a payment instruction. It states whether a pacs.008 or pacs.009 was accepted, rejected, pending or completed, with reason codes. Banks use it for tracking, reconciliation and exception handling. See also: pain.002, pacs.008, Exception.

pacs.004. An ISO 20022 message used to return a payment that was already settled but cannot be credited to the beneficiary. It reverses the original credit transfer and sends funds back to the debtor agent. It carries the original reference and a coded return reason, such as a closed account. See also: Return, pacs.008, Reject.

pacs.008. An ISO 20022 message for a financial institution to financial institution customer credit transfer. It replaces MT103 in cross border payments and carries structured debtor, creditor, charges and remittance data. Banks use it under CBPR+ and SEPA rules, with a UETR for end to end tracking. See also: MT103, pacs.002, UETR.

pacs.009. An ISO 20022 message for a financial institution to financial institution credit transfer with no customer beneficiary. It replaces MT202 and moves bank funds for cover, liquidity or own account transfers. It carries settlement amount, settlement date and the debtor and creditor agents. See also: MT202, pacs.008, Cover payment.

pain.001. An ISO 20022 message a customer sends to its bank to instruct one or more credit transfers. It carries payment information, debtor and creditor details, amount, execution date and remittance data. The bank validates the file and creates pacs.008 messages to execute the payments. See also: pain.002, pacs.008, Debtor.

pain.002. An ISO 20022 message a bank sends to its customer to report the status of payments instructed in a pain.001 file. It states whether each payment was accepted, rejected, pending or completed, with reason codes for failures. Corporates use it to reconcile files and fix rejected items. See also: pain.001, pacs.002, Reject.

Payment hub. A central system in a bank that receives payment instructions from all channels, validates them, applies screening and routing rules, and sends them to the correct clearing system or correspondent. A payment hub replaces separate channel systems and gives a single view of payments. See also: STP, API, Event-driven.

PEP. Politically exposed person, an individual who holds or held a prominent public function, such as a head of state, minister or senior official, or a close family member or associate. Banks apply enhanced due diligence to PEPs because of the higher risk of bribery and corruption. See also: KYC, AML, Sanctions screening.

PIISP. Payment instrument issuing service provider, a licensed provider that issues a payment instrument, such as a card, linked to a customer account held at another bank. It checks funds with the account bank before authorising a payment. It is a niche role under European payment rules. See also: PISP, AISP, PSD2.

PISP. Payment initiation service provider, a licensed provider that initiates payments from a customer account with the customer consent, under open banking rules. The PISP connects to the account holding bank through an API and sends the payment instruction. It never holds customer funds. See also: AISP, Open banking, PSD2.

POS. Point of sale, the place or terminal where a customer pays a merchant in person, usually by card or mobile device. POS terminals read the card, send an authorisation request to the issuer, and print or display a receipt. Modern POS systems also support contactless, wallets and QR payments. See also: Gateway, Authorisation, Capture.

Presentment. The submission of a card transaction by the acquirer to the scheme for clearing after authorisation and capture. Presentment includes the transaction details and amount, and it starts the clearing process that leads to settlement between issuer and acquirer. It must happen within scheme time limits. See also: Capture, Clearing, Interchange.

Promissory note. A written promise by one party to pay a stated amount to a named person on a stated date. It is a negotiable instrument, and the maker is liable to pay the holder. Promissory notes are used in lending and trade finance as evidence of a payment obligation. See also: Bill of exchange, Negotiable instrument, Documentary credit.

PSD2. Payment Services Directive 2, a European Union law that opened banking to third party providers, required strong customer authentication, and set rules for payment services. It created the PISP and AISP roles and required banks to offer secure APIs. PSD3 will update and replace parts of PSD2. See also: PSD3, Open banking, SCA.

PSD3. Payment Services Directive 3, the proposed successor to PSD2 that updates European payment rules, strengthens fraud controls, and clarifies open banking access. It is being developed alongside a Payment Services Regulation. Banks and providers must track its final text before planning changes. See also: PSD2, Open banking, SCA.

PSP. Payment service provider, a company that provides merchants with payment processing services, including authorisation, clearing, settlement and reporting. A PSP may work with acquirers or hold its own licence. It offers a single integration for multiple payment methods, currencies and channels. See also: Gateway, Aggregator, PISP.

Purpose code. A code that states the commercial reason for a payment, such as supplier payment, salary or goods. Purpose codes are taken from an ISO external code list and support regulatory reporting, screening and analytics. Banks map customer purpose descriptions to the correct code before sending. See also: Remittance information, pacs.008, pain.001.

Queue. A holding area in a payment system where payments wait for sufficient funds or for their turn to settle. In RTGS systems, queued payments are released in order when liquidity becomes available. Queue management, including reordering and bilateral offset, helps systems settle more payments. See also: RTGS, Liquidity, Settlement.

Reachable party. A bank or institution that can receive payments through a payment system via a direct participant, but does not itself send payments through the system. It is listed as reachable in system directories, so sending banks can route payments to it through its sponsoring direct participant. See also: Direct participant, Indirect participant, Addressable BIC.

Recall. A request by the sending bank to the receiving bank to return funds for a payment already sent, usually because of a duplicate, a technical error or fraud. The recall uses camt.056 in ISO 20022. The receiving bank may accept or reject the recall, depending on whether the funds are still available. See also: camt.056, Reversal, Refund.

Reconciliation. The process of comparing records from two sources, such as a bank statement and an internal ledger, to confirm they agree. Differences are called breaks and must be investigated and resolved. Regular reconciliation detects errors, fraud and missing entries, and it is a key financial control. See also: Break, Nostro reconciliation, camt.053.

Refund. A repayment of funds to a customer after a payment fails, is cancelled or is disputed. In card payments a refund returns money to the cardholder account. In account payments a refund may follow a return or a recall. The refund amount and value date must be recorded for reconciliation. See also: Return, Recall, Chargeback.

Reject. A payment instruction that is refused before settlement because it fails validation, screening or account checks. The rejecting bank sends a status report with a reason code, such as a wrong account number or a duplicate payment. The sender must correct the fault and resend if needed. See also: Return, pacs.002, Exception.

Remittance information. Information that explains what a payment is for, such as invoice numbers, contract references or salary month. It helps the beneficiary reconcile the receipt against open items. Remittance information can be unstructured free text or structured data with coded fields and references. See also: Structured vs unstructured remittance, Purpose code, pacs.008.

Repair. Manual correction of a payment that failed straight through processing because of missing or invalid data. Repair staff fix fields such as account numbers, BICs or charges, then release the payment. Repair is slower and costlier than STP, so banks track repair rates and fix root causes. See also: Exception, STP, SSI.

Retry. Repeating a failed request or message delivery after a delay, usually with a limit on attempts and a back off period. Retries handle transient faults such as network timeouts. In payments, retries must use idempotency keys to avoid duplicate payments when the first attempt actually succeeded. See also: Idempotency, Dead-letter queue, Circuit breaker.

Return. A payment that is sent back to the sender after settlement because it cannot be credited to the beneficiary. Returns use pacs.004 in ISO 20022 or MT103 return messages in SWIFT. Common reasons are a closed account, a wrong account number, or missing beneficiary details. See also: Reject, pacs.004, Recall.

Reversal. A transaction that cancels a previous payment by posting an equal and opposite entry. Reversals are used to correct errors, such as a duplicate debit or a wrong amount. The reversal restores the account to its original position and is linked to the original transaction for audit. See also: Recall, Return, Refund.

RMA. Relationship Management Application, a SWIFT service that lets banks exchange authorisations to send each other specific message types. A bank must hold a valid RMA from the receiver before it can send a payment message. Missing RMA is a common cause of payments being blocked at the sending bank. See also: MT103, Correspondent banking, Serial payment.

RTGS. Real time gross settlement, a system that settles payments one by one in real time with immediate finality. Each payment is settled in full, not netted against others, so the receiving bank can use the funds at once. Central banks operate RTGS systems for high value domestic payments. See also: T2, Settlement, Liquidity.

Sanctions screening. Checking payment parties, countries and references against sanctions lists published by governments and international bodies. Banks screen debtor, creditor, banks and any named parties before releasing a payment. A match stops the payment for review, and a confirmed match blocks it and may require reporting. See also: AML, KYC, PEP.

SCA. Strong customer authentication, a requirement under PSD2 that a payer must authenticate a payment with at least two of three factors, namely knowledge, possession and inherence. Examples are a password plus a phone, or a fingerprint plus a card. SCA reduces fraud in electronic payments. See also: PSD2, 3D Secure, Authorisation.

Scheme. A card or payment network that sets the rules, standards and fees for transactions between issuers and acquirers. Examples include global card networks and domestic schemes. The scheme provides clearing, brand, and dispute rules, and it connects participants so payments can flow across banks and countries. See also: Acquirer, Issuer, Interchange.

Scheme fee. A fee charged by a card scheme to issuers and acquirers for using its network, rules and brand. Scheme fees cover processing, clearing, compliance and fraud services. They are separate from interchange and acquirer markup, and they vary by transaction type, region and volume. See also: Interchange, Acquirer markup, Scheme.

SCT. SEPA Credit Transfer, a scheme for euro credit transfers between accounts in the SEPA area. It uses pacs.008 messages and a common set of rules, with a maximum execution time of one business day. The charge bearer is SLEV only, so charges are shared by service level agreement. See also: SEPA Direct Debit Core, SCT Inst, pacs.008.

SCT Inst. SEPA Instant Credit Transfer, a scheme for euro payments that settle within ten seconds at any time of day. It uses pacs.008 messages with instant processing rules and a maximum amount set by the scheme. Banks must confirm the payment result quickly so the creditor can release goods or services. See also: TIPS, SCT, pacs.008.

SDD. SEPA Direct Debit, a scheme that lets a creditor collect euro payments from debtor accounts in the SEPA area under a mandate. The core scheme serves consumers and businesses, while the B2B scheme serves businesses only. Collections use pain.008 and pacs.003 messages with defined return periods. See also: Mandate, SEPA Direct Debit B2B, pain.008.

Serial payment. A payment method where the customer instruction and the funds travel together through each bank in the chain. Each bank passes the same message to the next bank until it reaches the beneficiary bank. The method is simple to trace, but it depends on every bank in the chain. See also: Cover payment, MT103, MT202 COV.

Settlement. The final movement of funds between banks to discharge obligations created by cleared payments. Settlement is usually made in central bank money or through correspondent accounts. Once settlement is final it cannot be reversed, and the receiving bank can safely credit the beneficiary account. See also: Clearing, RTGS, Liquidity.

SHAR. A charge bearer code in ISO 20022 meaning charges are shared between debtor and creditor. Each bank deducts its own charges from its own customer, and the amount transferred between banks is not reduced. SHAR is the common choice for cross border payments under CBPR+ rules. See also: DEBT, CRED, Charge bearer.

SLEV. A charge bearer code in ISO 20022 meaning charges follow the service level agreement between the banks. In SEPA, SLEV is the only permitted charge bearer, so each bank charges its own customer and the full amount reaches the creditor. It simplifies pricing and reconciliation. See also: SHAR, DEBT, SCT.

SSI. Standing Settlement Instruction, a standing agreement that states the settlement account and routing a bank should use for payments in a given currency or with a given counterparty. SSIs are stored in bank systems and applied automatically. Correct SSIs prevent manual repair and settlement delays. See also: Nostro, Correspondent banking, Repair.

Standby LC. A standby letter of credit, a bank guarantee that pays the beneficiary if the applicant fails to meet an obligation, such as paying a supplier or completing a contract. It is used as a safety net rather than a normal payment method. Standby credits are governed by ISP98 rules. See also: Documentary credit, ISP98, UCP 600.

STP. Straight through processing, the automated handling of a payment from instruction to settlement without manual intervention. STP relies on structured data, valid references and agreed formats. High STP rates reduce cost, speed and errors, and banks measure STP to judge the quality of payment data. See also: Repair, Exception, Market practice.

Structured vs unstructured remittance. The choice between structured remittance data, with coded fields for invoice numbers and amounts that systems can match automatically, and unstructured free text, which a person must read. Structured data improves straight through processing and reconciliation, while unstructured text is simpler to produce. See also: Remittance information, Purpose code, STP.

Suspense account. A temporary account used to hold funds or entries that cannot yet be posted to their final account. Banks use suspense accounts for unidentified receipts, pending investigations and items awaiting information. Entries must be cleared promptly, and aged suspense items are reported as a control risk. See also: Wash account, T-account, Reconciliation.

SWIFT. The Society for Worldwide Interbank Financial Telecommunication, a member owned cooperative that provides secure messaging services for financial institutions. SWIFT carries MT and ISO 20022 messages between banks, and it operates the gpi service and the RMA authorisation service for members. See also: gpi, RMA, CBPR+.

T-account. A ledger representation of an account shaped like the letter T, with debits on the left and credits on the right. It is a teaching and analysis tool for double entry bookkeeping. Each payment creates equal debit and credit entries, and the T-account shows the balance after each posting. See also: Suspense account, Wash account, Reconciliation.

T2. TARGET2, now called T2, the Eurosystem real time gross settlement system for euro high value payments. It settles payments one by one in central bank money with finality on the same day. Banks hold main cash accounts in T2 and use it for interbank, customer and central bank operations. See also: RTGS, CLM, MCA.

TIPS. TARGET Instant Payment Settlement, a Eurosystem service that settles instant payments in central bank money in seconds. It supports SCT Inst and other instant schemes in euro and other currencies. Banks hold dedicated cash accounts in TIPS and fund them from their main RTGS accounts. See also: SCT Inst, T2, RTGS.

Tokenisation. Replacing a sensitive value, such as a card number, with a random token that has no meaning outside the system that created it. The token is used in transactions while the real value stays in a secure vault. Tokenisation reduces the risk of data theft and supports mobile and online payments. See also: 3D Secure, Authorisation, Gateway.

Transit account. An internal account used to hold funds temporarily while they move between systems or accounts. Transit accounts record the movement of money during settlement, currency conversion or internal transfers. They should net to zero after processing, and any balance left needs investigation. See also: Wash account, Suspense account, Liquidity transfer.

U2A. User to application, a mode where a human user accesses a payment system through a graphical interface or browser. In Eurosystem services, U2A lets operations staff view accounts, enter liquidity transfers and monitor payments manually. It complements A2A, which handles automated message flows. See also: A2A, ESMIG, T2.

UCP 600. Uniform Customs and Practice for Documentary Credits, revision 600, the set of rules published by the International Chamber of Commerce that governs documentary credits. It defines the roles, documents, examination standards and payment obligations for letters of credit in international trade. See also: Documentary credit, ISP98, Standby LC.

UETR. A unique end to end transaction reference assigned to each cross border payment for tracking through the whole chain. It is a UUID format value that stays unchanged from sender to beneficiary. Banks and customers use it to trace a payment, check its status and investigate delays. See also: InstrId, EndToEndId, gpi.

Value date. The date on which funds become available to the beneficiary and on which interest starts to accrue. It is the date used for settlement and for nostro posting. The value date may differ from the booking date, and banks must agree it with the customer and the receiving bank. See also: Execution date, Cut-off, Settlement.

Value dating. The practice of assigning a value date to a payment, which is the date funds become available and interest starts. Value dating affects nostro balances, customer interest and liquidity. Banks must agree the value date with the customer and apply it consistently across the chain. See also: Value date, Settlement, Execution date.

Velocity check. A fraud control that counts how many transactions a customer or card makes in a short period and flags unusual frequency. A sudden burst of payments may indicate a stolen card or account takeover. Banks set velocity limits by channel, amount and customer profile, and they block or review excess activity. See also: Fraud scoring, Authorisation, Exception.

Vostro. An account that a foreign bank holds with a domestic bank, seen from the domestic bank view. The term means your account with us. The domestic bank maintains the account, posts credits and debits, and provides statements so the account holder can reconcile its own nostro records. See also: Nostro, Correspondent banking, Nostro reconciliation.

Wash account. A temporary account used to pass funds through during a process, with equal debits and credits that net to zero. Wash accounts are used in settlement and currency conversion to record both legs of a transaction. They should hold a nil balance after processing, and any residual balance needs investigation. See also: Suspense account, T-account, Settlement.

Webhook. A method where a server sends an event notification to a client system as soon as something happens, instead of the client polling for updates. Payment systems use webhooks to report payment status, refunds and disputes. The receiver must verify the message and handle duplicate deliveries safely. See also: API, Event-driven, Correlation ID.

Message Catalogue

41 messages.

Scheme Catalogue

23 payment schemes and systems.

Scenario Library

23 reusable scenarios. The same scenario powers lessons, diagrams, quizzes, simulators and capstones, so the story never changes between sections.

Career Pathways

Five career paths in payments. Each one shows what the role does, the skills it needs, the chapters to study, and how the career progresses.

Payments Regulatory Radar

A dedicated regulatory update centre. Every entry answers six questions: what changed, why it changed, who is affected, what changes technically, what changes operationally, and what a BA needs to do.

ISO 20022 Message Versions by Rail

Same message, same version, different rules by rail. Check the version your rail actually runs before you write a requirement or a test case.