The presentation describes how the International Payments takes place. How Clearing and Settlement take place between the sender and receiver.

1. SWIFT
Society for Worldwide Interbank Financial
Telecommunication

2. Let’s Start with
some Important Terms

3. Correspondent Banks
• A correspondent bank provides services on behalf of another
bank, serving as a middleman of sorts between the issuing
bank and the receiving bank. Domestic banks often use
correspondent banks as their agent abroad to finish
transactions that either start or end in foreign nations.
• The correspondent bank can execute a number of transactions
on behalf of the domestic bank. These include completing wire
transfers, accepting deposits, serving as transfer agents, and
coordinating documents for another bank.

4. Intermediary Banks
• An intermediary bank is often needed when
international wire transfers are occurring
between two banks, often in different countries
that don't have an established financial
relationship
• Intermediary banks send cash to complete
foreign transactions, but the transactions are
just for one currency. Usually, in this instance,
a domestic bank is too small to handle
international transfers, so it reaches out to an
intermediary bank.

5. International Payment
IF BOTH THE BANK ARE ASSOCIATED WITH
EACH OTHER THERE IS NO SETTLEMENT
REQUIRED
IF BANK ARE NOT ASSOCIATED WITH EACH
OTHER THE CLEAR AND SETTLEMENT
SERVICE COMES IN THE PICTURE. THE
SETTLEMENT SERVICE WHICH IS
ASSOCIATED WITH RECEIVERS SIDE WILL BE
USED.

6. Clearing and Settlement
• Clearing is all of the steps involved in
transferring funds ownership from one party to
another except for the final step, which is
settlement.
• Settlement involves the finalization of a
payment, so that a new party takes possession
of transferred funds.

7. Different Clearing
and Settlement
Systems
SWIFT
NCDEX
(National
Commodity and
Derivatives
Exchange)
CHIPS (Clearing
House
Interbank
Payments
System)
CIPS (Cross-
Border
Interbank
Payment
System)

8. SWIFT
• SWIFT message types are the format or schema used to send
messages to financial institutions on the SWIFT (Society for
Worldwide Interbank Financial Telecommunication) network.
The original message types were developed by SWIFT and a
subset was retrospectively made into an ISO standard, ISO
15022. In many instances, SWIFT message types between
custodians follow the ISO standard.
• SWIFT is a vast messaging network used by banks and
other financial institutions to quickly, accurately, and securely
send and receive information, such as money transfer
instructions.
• The SWIFT international payment network is one of the largest
financial messaging systems in the world. TransferWise can
send or receive certain currencies via SWIFT payment.

9. 1. Instruct his bank to pay 4. Credit amount to Receiver
2. Send payment instruction to receivers bank
Sender Bank Receiver Bank
Settlement Service
3. Carries out settlement between Sender
and Receiver Bank

10. How SWIFT
works?
SWIFT have Message Structure, are the
format or schema used to send message to
financial institution.

11. Example of
SWIFT MT
message
{1:F01SOGEFRPPAXXX0070970817}{2:O1031734
150713DEUTDEFFBXXX00739698421607131634
N}{3:{103:TGT}{108:OPTUSERREF16CHAR}}{4:
:20:UNIQUEREFOFTRX16
:23B:CRED
:32A:180724EUR735927,75
:33B:EUR735927,75
:50A:/DE37500700100950596700
DEUTDEFF
:59:/FR7630003034950005005419318
CHARLES DUPONT COMPANY
RUE GENERAL DE GAULLE, 21
75013 PARIS
:71A:SHA
-}{5:{CHK:D628FE0165A7}}

12. SWIFT Message Structure
• A SWIFT MT message consists of the following blocks or segments:
→ {1:} Basic Header Block
→ {2:} Application Header Block
→ {3:} User Header Block
→ {4:} Text Block
→ {5:} Trailer Block

13. 1. SWIFT Message Structure: Basic
Header Block
• {1: – Identifies the Block – i.e. the Basic Header Block
• F – Indicates the Application Id – in this case, FIN
• 01 – Indicates the Service Id
• 01 = FIN
• 21 = Acknowledgement (ACK) or Negative Acknowledgement (NAK)
• YOURCODEZABC – The Logical Terminal Address – which is typically your
BIC 8 (YOURCODE) + Logical Terminal Code (Z) + Branch Code
• I know YOURCODE is an invalid BIC – but lets go with it…
• 1234 – Session Number – Ask SWIFT or your Service Bureau how they
want you to populate this – this is not very interesting for corporates
• 567890 – Sequence Number – As above, ask your SWIFT people how they
want this populated
• } – Indicated the end of the Basic Header Block
We will learn BIC in next slide

14. How is a
SWIFT / BIC
code
structured?
• When making a domestic or international
payment, you may be asked to supply a BIC
code to identify the financial institution where
the account of the beneficiary resides. The BIC
code is easily identifiable as it is made up of 8
or 11 characters broken down as such:
• Bank code (A-Z) : 4 letter code.
• Country code (A-Z) : 2 letter code.
• Location Code (0-9 or A-Z) : 2 digit code –
either letters or numbers.
• Branch Code (0-9 or A-Z) : optional 3 digit
code – either letters or numbers*.

15. 2. SWIFT Message Structure:
Application Header Block
• {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)
• 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

16. SWIFT Message Structure: Application Header Block
• Input
• Used in outgoing messages, when a message is input to the SWIFT network.
• I = Input
• Receiver's address with X in position 9/ It is padded with Xs if no branch is required. Example: BANKDEFFXXXX
• The message priority (S = System, N = Normal, U = Urgent)
• Delivery monitoring (1 = Non delivery warning, 2 = Delivery notification, 3 = Both valid
• Obsolescence period. It specifies when a non-delivery notification (003 - 15 minutes, 020 - 100 minutes)
• Output
• Used in incoming messages, when a message is output from the SWIFT network.
• O = Output
• Input time with respect to the sender
• The Message Input Reference (MIR), including input date, with Sender's address.
• Output date and time with respect to Receiver
• Message priority

17. 3. SWIFT Message Structure: User
Header Block
• {3: – Indicates the start of the User Header Block
• {113:SEPA} This is an optional 4 alphanumeric bank priority
code
• {108:ILOVESEPA} – Indicates the Message User Reference
(MUR) value, which can be up to 16 characters, and will be
returned in the ACK
• } – Indicated the end of the User Header Block

18. 4. SWIFT Message Structure: Text
Block
• {4:
• Followed by the details of the message you’re sending. In this
case, it is a MT101 – as indicated in Application Header Block
message type. work with your bank(s) to understand their
specific message requirements.
• Finally ending with -}

19. 5. SWIFT Message Structure: Trailer
Block
• {5:
• This can be added by you or the system. Work with your SWIFT
contacts to know if you need to indicate this block.
• And ends with }

20. Till Now we have seen the Message Structure,
now
we will see the Message Type for different type of
Payments

21. Message Type
(MT)
SWIFT messages consist of five blocks of the data including
three headers, message content, and a trailer. Message types
are crucial to identifying content.
Generally MT 1** series message are for customer payments
and cheques.
MT 2** series messages are financial institution transfers.
MT 103 - is used for cash transfer specifically for cross
border/international transfers. Simply, this is an instruction
given by the customer.
MT 202 - is used for bank/bank transfer (Mostly used by
financial institutions/banks etc.

22. Specification of
SWIFT MT
Message type Description
MT0xx System messages
MT1xx Customer payments and cheques
MT2xx Financial institution transfers
MT3xx Treasury markets
MT4xx Collection and cash letters
MT5xx Securities markets
MT6xx Treasury markets – metals and syndications
MT7xx Documentary credits and guarantees
MT8xx Travelers cheques
MT9xx Cash management and customer status

23. Let’s discuss some of
the Message Type

24. What is
MT103?
• MT103s are globally accepted as proofs of
payment and include all payment details such
as date, amount, currency, sender and
recipient.
• MT103s are also great for tracing
payments which are missing or delayed
because they show the route of the payment
between the banks.
• Payment initiation

26. MT103
Fields
STATUS TAG FIELD NAME CONTENT/OPTIONS NO.
M 20 Sender's Reference 16x 1
----->
O 13C Time Indication /8c/4!n1!x4!n 2
-----|
M 23B Bank Operation Code 4!c 3
----->
O 23E Instruction Code 4!c[/30x] 4
-----|
O 26T Transaction Type Code 3!c 5
M 32A Value Date/Currency/Interbank Settled Amount 6!n3!a15d 6
O 33B Currency/Instructed Amount 3!a15d 7
O 36 Exchange Rate 12d 8
M 50a Ordering Customer A, F, or K 9
O 51A Sending Institution
[/1!a][/34x]
4!a2!a2!c[3!c]
10
O 52a Ordering Institution A or D 11
O 53a Sender's Correspondent A, B, or D 12
O 54a Receiver's Correspondent A, B, or D 13
O 55a Third Reimbursement Institution A, B, or D 14
O 56a Intermediary Institution A, C, or D 15
O 57a Account With Institution A, B, C, or D 16
M 59a Beneficiary Customer No letter option, A, or F 17
O 70 Remittance Information 4*35x 18
M 71A Details of Charges 3!a 19
----->
O 71F Sender's Charges 3!a15d 20
-----|
O 71G Receiver's Charges 3!a15d 21
O 72 Sender to Receiver Information 6*35x 22
O 77B Regulatory Reporting 3*35x 23

27. What is
MT202?
• The MT202 also creates an audit trail, so it's
easy to see who helped process the transfer of
funds from the sender to the recipient.
• Facilitating the movement of funds between
financial institutions
• Settlement Notification

29. MT202 Fields
STATUS TAG FIELD NAME CONTENT/OPTIONS NO.
M 20
Transaction Reference
Number
16x 1
M 21 Related Reference 16x 2
----->
O 13C Time Indication /8c/4!n1!x4!n 3
-----|
M 32A
Value Date, Currency
Code, Amount
6!n3!a15d 4
O 52a Ordering Institution A or D 5
O 53a Sender's Correspondent A, B, or D 6
O 54a
Receiver's
Correspondent
A, B, or D 7
O 56a Intermediary A or D 8
O 57a Account With Institution A, B, or D 9
M 58a Beneficiary Institution A or D 10
O 72
Sender to Receiver
Information
6*35x 11
M = Mandatory, O = Optional - Network Validated Rules may apply

30. What is
MT202Cov?
• MT202 COV is a SWIFT message format for
financial institution (FI) funds transfer between
financial institutions.
• The MT202 COV is the bank-to-bank order that
instructs funds movement in alignment with the
MT103 messages.
• The MT202 COV is needed because of
correspondent banking networks and the
complexity of international funds movements.
Thus, an MT103 instruction is sent directly from
the originator's bank to the beneficiary's bank
instructing an account credit. The MT202 COV
instruction then works across the correspondent
banking network, instructing funds to move
across intermediate banks.

31. MT 202COV
Usage Rules
• All parties to the financial institution transfer (Sequence
A) must be financial institutions.
• The transfer of funds between the ordering institution and
the beneficiary institution is always related to (an)
underlying customer credit transfer(s). Field 21 must refer
to the underlying transaction(s).
• The MT202 COV must not be used to convey customer
credit transfer instructions; it is used to order the
movement of funds related to underlying customer credit
transfers that were sent with the cover method.
• The MT202 COV must not be forwarded to the beneficiary
financial institution for reporting purposes.
• Usage of MT202 COV should only be with the conjunction
of MT103/MT103 +.

32. MT202Cov
Fields
STATUS TAG FIELD NAME CONTENT/OPTIONS NO.
Mandatory Sequence A General Information
M 20 Transaction Reference Number 16x 1
M 21 Related Reference 16x 2
----->
O 13C Time Indication /8c/4!n1!x4!n 3
-----|
M 32A Value Date, Currency Code, Amount 6!n3!a15d 4
O 52a Ordering Institution A or D 5
O 53a Sender's Correspondent A, B, or D 6
O 54a Receiver's Correspondent A, B, or D 7
O 56a Intermediary A or D 8
O 57a Account With Institution A, B, or D 9
M 58a Beneficiary Institution A or D 10
O 72 Sender to Receiver Information 6*35x 11
End of Sequence A General Information
Mandatory Sequence B Underlying Customer Credit Transfer Details
M 50a Ordering Customer A, F, or K 12
O 52a Ordering Institution A or D 13
O 56a Intermediary Institution A, C, or D 14
O 57a Account With Institution A, B, C, or D 15
M 59a Beneficiary Customer No letter option, A, or F 16
O 70 Remittance Information 4*35x 17
O 72 Sender to Receiver Information 6*35x 18
O 33B Currency/Instructed Amount 3!a15d 19
End of Sequence B Underlying Customer Credit Transfer Details
M = Mandatory, O = Optional - Network Validated Rules may apply

33. Difference Between MT202 and MT202COV
MT202 COV IS NOW MANDATED
FOR COVER PAYMENTS
MT202 IS STRICTLY FOR BANK-
TO-BANK PAYMENTS.

34. What is
MT901?
• It is used to notify the account owner of an
entry which has been credited to its account.
The entry will be further confirmed by
statement.
• Sent by a concentrating financial institution to
an account owner or a party authorised by the
account owner to receive the information.
• Sent by an account servicing institution to an
account owner.

35. MT901
Fields
STATUS TAG FIELD NAME CONTENT/OPTIONS NO.
M 20
Transaction Reference
Number
16x 1
M 21 Related Reference 16x 2
M 25a Account Identification No letter option or P 3
O 13D Date/Time Indication 6!n4!n1!x4!n 4
M 32A
Value Date, Currency
Code, Amount
6!n3!a15d 5
O 50a Ordering Customer A, F, or K 6
O 52a Ordering Institution A or D 7
O 56a Intermediary A or D 8
O 72
Sender to Receiver
Information
6*35x 9
M = Mandatory, O = Optional - Network Validated Rules may apply

36. Examples

37. MT103 Simple Case
The customer “Vishal" of bank ICICI in Switzerland wants to send 500k EUR to “Coca Cola”,
a corporation located in Paris which is a Citi customer.

38. Vishal Citi
CITIXXXXXX123
ICICI
ICICIXXXXX123
Coca ColaMT103
Field Name TAG Value
Sender Block 1 ICICIXXXXX123 (ICICI)
Message Type Block 2 103
Receiver Block 2 CITIXXXXXX123 (Citi)
Sender’s Reference 20 1234ABCD
Bank Operation Code 23B CRED
Date/Currency/Amount 32A 200504EUR500000
Currency/Amount 33B EUR499950,0
Ordering Customer 50K /ABCDEF123456
Vishal
Beneficiary Customer 59 /GHIJKLM78900
Coca Cola

39. MT103 Simple
Case Message
Structure
{1:F01ICICIXXXXX1230987654321}{2:I103CITIXXXXXX12
3N}{3:{113:SEPA}{108:TRUMPTOMODI}}{4:
:20:1234ABCD
:23B:CRED
:32A:200504EUR500000
:33B:EUR499950,0
:50K:/ABCDEF123456 Vishal
:59a:/GHIJKLM78900 Coca Cola
-}{5:{CHK:D628FE0165A7}}

40. MT202
YES Bank wants to send 1 million euros from its general VOSTRO
account 1234-5678 by BNP Paribas to another of its own account
FR982381827331 also by BNP Paribas.
The field "Receiver's Correspondent" - 53B - is diverted for the usage of
identifying the source account to use for debit.

41. YES Bank Citi BankMT202
Field Name Tag Value
Sender Block 1 YESXXXXXXX123
Message Type Block 2 202
Receiver Block 2 CITIXXXXXX123
Sender Reference 20 1234ABCD
Related Reference 21 1234ABCD
Date/Currency/Amount 32A 200503EUR1000000
Receiver’s Correspondence 53B /12345678
Account with Institution 57A /ABCDE1234567
CITIXXXXXX123
Beneficiary Institution 58A YESXXXXXXX123

42. MT202 Message
Structure
{1:F01YESXXXXXXX1230987654321}{2:I202CITIXXXXXX1
23N}{3:{113:SEPA}{108:TRUMPTOMODI}}{4:
:20:1234ABCD
:21:1234ABCD
:32A:200503EUR1000000
:53B:/12345678
:57A:/ABCDE1234567 CITIXXXXXX123
:58A:YESXXXXXXX123
-}{5:{CHK:D628FE0165A7}}

43. MT202 COV
Trump wants to send money from US to Modi in India on 1st May 2020. Trump will instruct his bank
BNY using either a written instruction or using his internet banking. Bank will then, using the details
in the form initiate/construct an MT103 message and send it to SBI India.
Upon receiving this MT103, SBI will know who has sent the fund, from where, how much and to
whom etc.. but SBI will not credit Modi's account immediately. Because it has only received the
instruction from BNY but not the money yet! BNY is then also expected to send an MT202 which
will contain details of what account of BNY in SBI's book to debit and then credit the funds to
beneficiary. This MT202 is actually the cover for MT103 sent earlier and hence called MT202Cov.

44. Trump ModiBNY SBI
MT103
MT202Conv
CITI US CITI INDIA
Sender
Correspondent
Account with
Institution
Beneficiary
Institution
Ordering
Institution

45. MT202COV
STATUS TAG FIELD NAME CONTENT
M 20 Transaction Reference Number BNY01060001
M 21 Related Reference 103REF405775
----->
O 13C Time Indication
-----|
M 32A Value Date, Currency Code, Amount 200515USD,100000000.00
O 52a Ordering Institution BNY
O 53a Sender's Correspondent CITI US
O 54a Receiver's Correspondent
O 56a Intermediary
O 57a Account With Institution CITI INDIA
M 58a Beneficiary Institution SBI
O 72 Sender to Receiver Information TRUMPTOMODI
M = Mandatory, O = Optional - Network Validated Rules may apply

46. MT103
STATUS TAG FIELD NAME Content
M 20 Sender's Reference BNY1234
O 13C Time Indication
M 23B Bank Operation Code CRED
O 23E Instruction Code
O 26T Transaction Type Code
M 32A Value Date/Currency/Interbank Settled Amount 200515USD,100000000.00
O 33B Currency/Instructed Amount USD100000000.00
M 50a Ordering Customer /US123456776 Trump
O 51A Sending Institution
O 52a Ordering Institution
O 53a Sender's Correspondent CITI US
O 54a Receiver's Correspondent
O 57a Account With Institution
M 59a Beneficiary Customer /IN11123456 MODI
O 70 Remittance Information
M 71A Details of Charges OUR
O 71F Sender's Charges
O 71G Receiver's Charges USD10.50

47. MT901
STATUS TAG FIELD NAME EXAMPLE COMMENT
M 20
Transaction Reference
Number
BNY01060001 This is the Sender's Reference specific to this MT910
M 21 Related Reference 103REF405775
This is the Sender's Reference (:20:) of the MT103
Announcement
M 25a Account Identification 835-162-85
O 13D Date/Time Indication 1808301535-0400
Date takes the format YYMMDD. Time takes the format HHMM.
Time zone comes after the +/- sign (- in this case). 1535 is UTC-4
hours. So UTC is 1935. UTC stands for Universal Time
Coordinated.
M 32A
Value Date, Currency Code,
Amount
200515USD,100000000.00 6!n3!a15d (Date)(Currency)(Amount)
O 50a Ordering Customer
O 52a Ordering Institution BNPAFRPP
O 56a Intermediary PNBPUS3N
The Sender received the funds directly from PNBPUS3N and not
from BNPAFRPP. That is why this field is populated.
O 72
Sender to Receiver
Information
M = Mandatory, O = Optional - Network Validated Rules may apply

48. MT901
Message
Structure
{1:F21O901BNYX0201123}{2:O901BNYX0201123
N}{3:{113:SEPA}{108:TRUMPTOMODI}}{4:
:20:BNY01060001
:21:103REF405775
:25:835-162-85
:13D:1808301535-0400
:32A:200515USD367574,90
:52A:BNPAFRPP
:56A:PNBPUS3N
-}{5:{CHK:D628FE0165A7}}

49. Thank You

50. References
• https://www.youtube.com/channel/UCwsOoSr8G_MmAo
Z6295SoOg
• https://www.moneymover.com/about/faqs/what-mt103/
• http://www.iotafinance.com/en/SWIFT-ISO15022-
Message-type-MT103.html
• https://www.niceideas.ch/roller2/badtrash/entry/dissecti
ng-swift-message-types-involved