The above diagram shows the steps of the monetary transaction transmission process in compliance with ISO 20022. Steps 1 and 2 include the acquisition and invoicing of com-modities, and steps 3–6 the steps relating to the monetary transaction resulting from the real process. The graph provides an overview of the main parties involved in a monetary trans-action in the form of the traditional four-corner model:
o
Debtor
o
Ultimate Debtor
o
Creditor
o
Ultimate Creditor
o
Debtor Agent
o
Creditor Agent.
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Applied to different steps of the monetary transaction, the ISO 20022 standard offers the most viable alternative for the structured transmission of transaction information. However, as the only clearing mechanism between banks, the SEPA infrastructure is the only one to apply the ISO 20022 standard to the payment transmission system. This is why all of the data relevant to the Debtor or Creditor cannot always be transmitted in other clearing sys-tems in full or unchanged.
The steps in the diagram are as follows:
1.
The Debtor purchases goods or services from the Creditor
2.
Invoice with allocation data (usually the Creditor’s reference)
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The Creditor supplies the purchased commodities and an invoice for them
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The invoice includes allocation information, which may be an invoice number or a lo-cal or national reference, or, starting later in 2010, an international reference (Creditor Reference, ISO 11649)
3.
Payment transaction/pain.001
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The Debtor sends the payment using the ISO 20022 pain.001 message
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The Debtor assigns a payment reference to the payment for the purpose of its own accounts payable allocation (Instruction Id and EndToEndId)
Instruction Id is the actual Debtor’s reference
EndToEndId is used throughout the transaction transmission process as a clear-ing reference (not included in the diagram); with regard to SEPA transactions, the transfer of this reference even between banks is guaranteed.
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The Creditor’s reference (Creditor Reference of Remittance Id) required by the Creditor for accounts payable or invoicing allocation is also transferred in connec-tion with the payment message
Creditor Reference is the Creditor’s reference on the invoice
Remittance id is the Debtor’s reference to the payment’s data content for the Creditor, usually a compilation of paid invoices for which an itemisation is sent to the Creditor separately
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The Debtor Agent acknowledges the payment order received with the ISO 20022 pain.002 message, which tells the Debtor the payment’s reception and processing status (depending on the bank, several statuses are possible)
4.
Payment transmission system
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Since each country-specific or regional payment transfer system applies a different transaction standard, there are also differences between their capacity to transmit data content related to a payment transaction
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The SEPA clearing mechanism applies the same ISO 20022 standard and the mes-sage pacs.008
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Depending on the ability of the payment transmission system, the Creditor’s refer-ence and other data content relevant to the Debtor will be transferred to the Debtor Agent or some of the content may have to be omitted (not in SEPA)
5.
Debtor Agent’s and Creditor Agent’s account reporting
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Reporting using the ISO 20022 camt.053 account statement message or the camt.054 specifying message. The current day account reporting message camt.052 may also be used where necessary for reporting account transactions and for balance monitor-ing during a given day.
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The Debtor is interested in recovering payment references for accounts payable allo-cation, as well as other account transactions on the account statement or specifica-tion, which the Debtor Agent reports using camt-messages
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Correspondingly, the Creditor wishes to receive, in account reporting, its own Credi-tor’s references in connection with incoming payments for the purpose of automated accounts payable or invoicing allocation, as well as any other account transactions
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included in the account statement or specification. The Creditor Agent reports transaction data using camt-messages.
6.
Ultimate Debtor and Ultimate Creditor
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Since the implementation of the SEPA Rulebook 3.2 in February 2009, it has been possible to provide the name and identifying code of the Ultimate Debtor and Ulti-mate Creditor. Corporate customers may use this data to establish internal payment and collection centres and, when necessary, ultimately also optimise the number and structure of accounts with a view to facilitating liquidity management.
The diagram also demonstrates concretely that Camt account reporting is urgently required to complement this transaction transmission chain as soon as corporations migrate to ISO 20022 in payment orders. Since transaction transmission between banks with regard to SEPA payments also complies with ISO 20022, reporting complying with this standard to Debtor and Creditor may transfer all critical data without any loss of data or need for data conversion.
