First in MT
In Cross border payment, the corresponding banking services are given against the charges they cut or incur to the amount instructed. The well-known charging code of BEN , SHA and OUR is highly used in MT payment processing, and in some cases it clearly visible how much the amount would be given to the beneficiary (of course not all money goes into charges in a flow). To easily understand what are these codes
Charges code | what can we understand from the code ? |
BEN | All charges would be cut by receiving agent who is serving /processing the account of the beneficiary. Even 71F amount will be cut by the receiving agent as described in MT 103 |
SHA | Both parties will cut their share of charges from the transaction amount, and it is highly used where receiver charges are not known fully. |
OUR | All charges would be cut by the sender agent who made the payment forward and he knows the amount of charges that is cut by the receiver agent , thus 71 G is added to MT 103 |
In the current time, the amount which has been described for charges is not fully the satisfied amount which receiver wants to cut or incur, they either formally or informally do cut additional charges with MT191 requesting the sender agent to make the payment, informally either with phone, mail or Fax. Formally the amount which is sent for interbank settlement can be deduced with below equation.
F32A = F33B + F71G - (F71F +F71F+ ...... ) for multiple correspondents in the flow
The SWIFT standard has not foreseen a specific field where you find the exact amount that the beneficiary receives.
Let see check each case with the examples :
Consider following payment scenario build-up with debtor and ordering institution
Pay the equivalent of EUR 1000,00 in GBP to a beneficiary in the United Kingdom
The exchange rate is 1 EUR for 0,61999 GBP
Transaction charges on the Sender's side are EUR 5,00 (=GBP 3,1)
Transaction charges on the Receiver's side are GBP 4 (=EUR 6,45)
There is only one correspondence between the debtor and beneficiary
Example A1: The charging option is OUR.
Amount debited from the ordering customer's account:
Instructed Amount EUR 1000,00 + Sender's charges EUR 5,00 + Receiver's charges EUR 6,45 = Debit Amount EUR 1011,45.
Thus the notification or reporting or bank statement will have a settled amount showing GBP 623,99, that is, field 32A (MT 910 . MT 950, MT 940, MT 103).
The MT 103 which is going to be sent to the receiver agent will have the following details
(One Point to should see you may not find F71F here as the sender has processed it and send further the payment for settlement with the receiver if there are more correspondents in between it would give F71F asking in between correspondent to cut their part of charge).
Amount credited to the beneficiary: Interbank settlement amount GBP 623,99 - Receiver's charges GBP 4,00 = Credit amount GBP 619,99
Example A2: Charging option is SHA
Amount debited from the ordering customer's account:
Instructed amount EUR 1000,00 + Sender's charges EUR 5,00 = Debit amount EUR 1005,00
Thus the notification or reporting or bank statement will have a settled amount showing GBP 619,99, that is, field 32A (MT 910 . MT 950, MT 940, MT 103)The MT 103 sent to the receiver will have the following fields.
(One Point to should see you may not find F71F and F71G here as the sender has processed it and send further the payment for settlement with the receiver and receiver charges are not known fully by sending party and so receiver debits it charge from the settlement amount and credit rest to the Beneficiary).
Amount credited to the beneficiary: F33B Interbank settlement amount GBP 619,99 - F71G Receiver's charges GBP 4,00 = F32A Credit amount GBP 615,99
Example A3: Charging option is BEN
Amount debited from the ordering customer's account:
Instructed amount = Debit amount EUR 1000,00
Reduction in the transferable amount to the beneficiary can be observed here as the sender has requested the receiver to debit his share of charge and also debit their own which the sender may not be fully aware of , the MT 103 sent to receiver will have following fields filled , you can see the interbank settlement amount F32A has not been mentioned as GBP 619.89 but as GBP 616.89 as the amount GBP 3.1 would be debited kept separately and advised.
Amount credited to the beneficiary:
Equivalent of Instructed amount GBP 619,99 - Sender's charges GBP 3,1 - Receiver's charges GBP 4,00 = Credit amount GBP 612,89
Note: The beneficiary is also advised of the Sender's charges of GBP 3,1.