Payments, Clearing and Settlement Systems
Payments, clearing and settlement tests the message, the rail and the moment of finality. Expect questions on ISO 20022 migration, correspondent routing, charge codes, value dating and settlement risk.
Messages and rails
MT103 (customer transfer) maps to pacs.008; MT202 and MT202 COV map to pacs.009; camt.053 is the statement; pain.001 is customer initiation. SWIFT's CBPR+ coexistence began in November 2022, with MT retired for cross-border payments in November 2025. The UETR is the end-to-end reference that makes gpi tracking work. RTGS systems settle in central bank money: T2 for the euro (successor to TARGET2), CHAPS for sterling, Fedwire for the dollar. CLS settles FX on payment-versus-payment, removing principal (Herstatt) risk for its eligible currencies.
Charge codes
OUR: the sender bears all charges and the beneficiary receives the full amount. SHA: the sender pays the sending bank's charges; the beneficiary bears correspondent and beneficiary-bank charges. BEN: all charges are deducted from the amount paid.
Worked example
USD 100,000 is sent from London to Asia through two US correspondents, charges SHA, each intermediary deducting USD 25. The beneficiary receives 99,950. Under OUR the beneficiary would receive 100,000 and the ordering party would be billed the intermediaries' charges afterwards. Under BEN the sending bank's own charge is also deducted. SHA is not a 50/50 split; it allocates by side of the chain.
Traps
- MT202 COV must carry originator and beneficiary details; a plain MT202 covering a customer payment is a compliance failure.
- Value date and settlement date are not the same; back-valuing compensates, it does not correct.
- CLS does not cover every currency.
- Instant schemes (SCT Inst, TIPS, FedNow) settle 24/7 but carry message-size limits and no FX conversion.