Payments Training Hub
Credit transfer PAYMENT OPERATIONS STARTED LIVE 01 Credit transfer - push payment. ACTIVE 02 Payer bank - instruction, then debits the payer. QUEUED 03 Settlement between the banks - Eurosystem settlement system. QUEUED 04 Common codes - AC01 for an incorrect account number QUEUED 05 Mistaken payment recall - When a payment was sent by mistake QUEUED 06 Payment after daily cut-off - instructed after the daily cut off waits QUEUED A credit transfer is a push payment. Step 1 of 6 Credit transfer STARTED Credit transfer push payment. ACTIVE Payer bank instruction, then debits the payer. QUEUED Settlement between the banks Eurosystem settlement system. QUEUED Common codes AC01 for an incorrect account number QUEUED Mistaken payment recall When a payment was sent by mistake QUEUED Payment after daily cut-off instructed after the daily cut off waits QUEUED A credit transfer is a push payment.
Payer bank validates PAYMENT OPERATIONS IN PROGRESS LIVE 01 Credit transfer - push payment. DONE 02 Payer bank - instruction, then debits the payer. ACTIVE 03 Settlement between the banks - Eurosystem settlement system. QUEUED 04 Common codes - AC01 for an incorrect account number QUEUED 05 Mistaken payment recall - When a payment was sent by mistake QUEUED 06 Payment after daily cut-off - instructed after the daily cut off waits QUEUED The payer bank validates the instruction, then debits the payer. Step 2 of 6 Payer bank validates IN PROGRESS Credit transfer push payment. DONE Payer bank instruction, then debits the payer. ACTIVE Settlement between the banks Eurosystem settlement system. QUEUED Common codes AC01 for an incorrect account number QUEUED Mistaken payment recall When a payment was sent by mistake QUEUED Payment after daily cut-off instructed after the daily cut off waits QUEUED The payer bank validates the instruction, then debits the payer.
Settlement between the banks happens through T2 PAYMENT OPERATIONS IN PROGRESS LIVE 01 Credit transfer - push payment. DONE 02 Payer bank - instruction, then debits the payer. DONE 03 Settlement between the banks - Eurosystem settlement system. ACTIVE 04 Common codes - AC01 for an incorrect account number QUEUED 05 Mistaken payment recall - When a payment was sent by mistake QUEUED 06 Payment after daily cut-off - instructed after the daily cut off waits QUEUED Settlement between the banks happens through T2, the Eurosystem settlement system. Step 3 of 6 Settlement between the banks happens through T2 IN PROGRESS Credit transfer push payment. DONE Payer bank instruction, then debits the payer. DONE Settlement between the banks Eurosystem settlement system. ACTIVE Common codes AC01 for an incorrect account number QUEUED Mistaken payment recall When a payment was sent by mistake QUEUED Payment after daily cut-off instructed after the daily cut off waits QUEUED Settlement between the banks happens through T2, the Eurosystem settlement system.
Common codes PAYMENT OPERATIONS IN PROGRESS LIVE 01 Credit transfer - push payment. DONE 02 Payer bank - instruction, then debits the payer. DONE 03 Settlement between the banks - Eurosystem settlement system. DONE 04 Common codes - AC01 for an incorrect account number ACTIVE 05 Mistaken payment recall - When a payment was sent by mistake QUEUED 06 Payment after daily cut-off - instructed after the daily cut off waits QUEUED Common codes are AC01 for an incorrect account number, RC01 for a wrong bank identifier, AG01 for a forbidden transaction, AM04 for insufficient funds, and FF01 for an invalid file format. Step 4 of 6 Common codes IN PROGRESS Credit transfer push payment. DONE Payer bank instruction, then debits the payer. DONE Settlement between the banks Eurosystem settlement system. DONE Common codes AC01 for an incorrect account number ACTIVE Mistaken payment recall When a payment was sent by mistake QUEUED Payment after daily cut-off instructed after the daily cut off waits QUEUED Common codes are AC01 for an incorrect account number, RC01 for a wrong bank identifier, AG01 for a forbidden transaction, AM04 for insufficient funds, and FF01 for an invalid file format.
Mistaken payment recall PAYMENT OPERATIONS IN PROGRESS LIVE 01 Credit transfer - push payment. DONE 02 Payer bank - instruction, then debits the payer. DONE 03 Settlement between the banks - Eurosystem settlement system. DONE 04 Common codes - AC01 for an incorrect account number DONE 05 Mistaken payment recall - When a payment was sent by mistake ACTIVE 06 Payment after daily cut-off - instructed after the daily cut off waits QUEUED When a payment was sent by mistake, duplicated, or sent to the wrong payee, the payer bank asks for it back with a camt.056 cancellation request. Step 5 of 6 Mistaken payment recall IN PROGRESS Credit transfer push payment. DONE Payer bank instruction, then debits the payer. DONE Settlement between the banks Eurosystem settlement system. DONE Common codes AC01 for an incorrect account number DONE Mistaken payment recall When a payment was sent by mistake ACTIVE Payment after daily cut-off instructed after the daily cut off waits QUEUED When a payment was sent by mistake, duplicated, or sent to the wrong payee, the payer bank asks for it back with a camt.056 cancellation request.
Payment after daily cut-off PAYMENT OPERATIONS COMPLETE LIVE 01 Credit transfer - push payment. DONE 02 Payer bank - instruction, then debits the payer. DONE 03 Settlement between the banks - Eurosystem settlement system. DONE 04 Common codes - AC01 for an incorrect account number DONE 05 Mistaken payment recall - When a payment was sent by mistake DONE 06 Payment after daily cut-off - instructed after the daily cut off waits ACTIVE A payment instructed after the daily cut off waits for the next clearing cycle, and one instructed on a Friday may not settle until Monday. Step 6 of 6 Payment after daily cut-off COMPLETE Credit transfer push payment. DONE Payer bank instruction, then debits the payer. DONE Settlement between the banks Eurosystem settlement system. DONE Common codes AC01 for an incorrect account number DONE Mistaken payment recall When a payment was sent by mistake DONE Payment after daily cut-off instructed after the daily cut off waits ACTIVE A payment instructed after the daily cut off waits for the next clearing cycle, and one instructed on a Friday may not settle until Monday.

Key points of this lesson, in order.

0:00 / 4:54 Step 1 of 6

SEPA Credit Transfer: SCT

Europe: SEPA and T2, Lesson 3 of 10, Narration 4:54, D05 Domestic payment systems

Remittance informationReconciliationSettlement

What you will learn

Your objective. By the end of this lesson, you will be able to explain SEPA credit transfer: sct. A credit transfer is a push payment.

Why it matters. Duplicates and cut off times cause the failures analysts see most.

Chapter objective: Learner explains SEPA credit transfer, SEPA direct debit, SEPA Instant, and TARGET2, including IBAN, BIC, cut-offs, and settlement, and traces a euro payment across Europe. Learner demonstrates this skill using realistic banking examples, explaining each step clearly and using correct terminology throughout.

Key learning points

  • Credit transfer
  • Payer bank validates
  • Settlement between the banks happens through T2
  • Common codes
  • Mistaken payment recall
  • Payment after daily cut-off

Key terms

Remittance information: Information that explains what a payment is for, such as invoice numbers, contract references or salary month.

Reconciliation: The process of comparing records from two sources, such as a bank statement and an internal ledger, to confirm they agree.

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.

Payment flow diagram showing SEPA Credit Transfer: SCT.

Practise this lesson

Exercise

Decide which settlement model fits the scenario in this lesson and explain why.

Use the settlement models, the liquidity trade-off and the finality rules in this lesson.

  1. What to do. Name the model, state when settlement becomes final, and explain what happens if the sending bank does not have enough liquidity.

Correct result. Real time gross settlement settles each payment individually in central bank money with immediate finality, but it needs liquidity for every payment. Deferred net settlement nets payments and settles the net position, which needs less liquidity but leaves settlement risk until the net settles.

Why. Settlement is where money actually moves. The model decides the risk, the liquidity need, and when the payment is truly final.

Check your understanding

Practice question

A bank in the euro area is planning its instant payments rollout. Its compliance team says there is a single deadline in 2025 for everything. What is the correct position?

Takeaway and next step

What to remember

The analyst checks cut off times, pacs.008 validation, code mapping, and reconciliation of every pacs.002 against the original pain.001.

Follow a payment through every stage, from instruction to beneficiary credit, and note where it can stop.

Open the Payment Lifecycle Simulator →

Builds on "IBAN and the SEPA account identifier".

Transcript and full text

Show transcript

A credit transfer is a push payment. The payer tells their own bank to send a defined amount of euro to the payee, and the payee does nothing. The payer bank moves the money through the clearing system to the payee bank, and the payee bank credits the account. The scheme rulebook sets a maximum execution time of one business day, and the full amount must be credited. That last rule matters: no bank in the chain may deduct a charge from the amount, so the payee receives exactly what the payer sent. Follow one payment end to end. A German manufacturing company in Munich needs to pay a French supplier in Lyon 25,000 euro for an invoice, and the payment must arrive by tomorrow. The company instructs the payment through its online banking portal at 10am on a Tuesday, giving the supplier name, the supplier IBAN, the amount of 25,000 euro, the invoice number as remittance information, and the end to end reference. The instruction reaches the payer bank as a pain.001, a customer credit transfer initiation. It carries the payer and payee names, the payee IBAN, the amount, the remittance information, and the end to end reference. A wrong field here is the most common cause of failure, and the bank validates the pain.001 before anything else happens. The payer bank validates the instruction, then debits the payer. The bank checks that the IBAN is well formed with the MOD 97 check, that the account holds enough money, that the payment passes sanctions and fraud screening, and that it arrived before the daily cut off. If the checks pass, the bank debits the payer account 25,000 euro, accepts the payment, and the status becomes ACCP. If a check fails, the bank rejects the instruction at once and tells the payer through a pain.002 status report, with a reason code that says what failed. The debit is the point of no return for the payer: from this moment the money has left their account, and getting it back needs a return or a recall. The payer bank sends a pacs.008 to the payee bank. The interbank leg is a pacs.008, a financial institution to financial institution customer credit transfer, carrying the debtor and creditor agents, the amount, and the remittance information. It travels through a clearing system, most often STEP2, the retail clearing system operated by EBA Clearing. Settlement between the banks happens through T2, the Eurosystem settlement system. While settlement is in process the status is ACSP, and on completion it becomes ACSC. The payer bank's account at its central bank is debited and the payee bank's account is credited, in central bank money, and the net position between the two banks is settled as part of the STEP2 cycle. The payee bank credits the payee account in full. On receipt, the payee bank checks that the creditor IBAN belongs to an open account and that nothing blocks the credit. It then credits the full 25,000 euro, with no deduction, and the status becomes ACCC. The customer can be told about the credit with a camt.054 notification, and the credit appears on the statement reported in a camt.053. Every step leaves a trail for operations and reconciliation: the pain.001 from the customer, the pacs.008 between the banks, the pacs.002 status reports at each stage, and the camt.053 statement at the end. An operations team that can follow that trail can answer any customer question about where the payment is. The debit and credit entries are worth writing down. On the books of the payer bank, the payer's account is debited 25,000 euro and the bank's settlement account is credited. On the books of the clearing system, the payer bank's position is debited and the payee bank's position is credited. On the books of the payee bank, the settlement account is debited and the payee's account is credited 25,000 euro. Every entry balances, and the full amount arrives because no bank in the chain is allowed to deduct a charge. If a bank did deduct a charge, the payee would receive less than 25,000 euro, the payment would breach the scheme rule, and the payer bank would have to make up the difference. Cut offs decide which day the payment settles. The payer bank has a daily cut off for SCT payments, and a payment instructed before the cut off is sent to the clearing system the same day and settled the next business day at the latest. A payment instructed after the cut off waits for the next clearing cycle. A payment instructed on a Friday may not settle until Monday, because Saturday and Sunday are not business days for SCT settlement. The analyst must show the cut off in the product, state the value date clearly, and warn the customer when a payment instructed now will not settle until after the weekend. A supplier who expected the money on Friday and receives it on Monday will call, and the operations team must be able to explain the cut off. Rejects stop the payment before the money moves. When a payment cannot be delivered, the payee bank or the clearing system reports it with a pacs.002 carrying status RJCT and a reason code. Common codes are AC01 for an incorrect account number, RC01 for a wrong bank identifier, AG01 for a forbidden transaction, AM04 for insufficient funds, and FF01 for an invalid file format. The payer bank passes the rejection back in a pain.002, and the payer must correct the instruction and resubmit it. A reject is the cheapest failure, because the money never left the payer's account, and the analyst should design the rejection message to say exactly what is wrong and what the payer should do next. Returns send the money back after settlement. A return happens after settlement when the payee bank cannot credit the payment, and it travels back as a pacs.004, a payment return. Typical codes are AC04 for a closed account, AC06 for a blocked account, MD07 for a deceased account holder, and AG01 for a forbidden transaction. The payee bank returns the full original amount, 25,000 euro in our example, and the payer bank credits the payer. The reason code decides whether the payment can simply be sent again: a closed account means the payer needs new details, while a blocked account may mean the payer should try again later. The analyst must map each return code to an action and a customer message. Recalls ask for the money back after it has been credited. When a payment was sent by mistake, duplicated, or sent to the wrong payee, the payer bank asks for it back with a camt.056 cancellation request. The payee bank answers with a camt.029, a resolution of investigation, and must ask the payee for consent first, because the credit is now the payee's money. If the payee agrees, the funds come back as a pacs.004 return. A refusal means no automatic recovery, and the payer must pursue the matter directly with the payee. The analyst must make this clear to customers: a recall is a request, not a reversal, and the payee can say no. Duplicates and cut off times cause the failures analysts see most. A duplicate carries the same end to end reference, amount, and value date as an earlier payment, and it is rejected with reason code AM05. Duplicate detection must run at the payer bank before the pacs.008 is sent, because stopping one after settlement means a return or a recall. A payment instructed after the daily cut off waits for the next clearing cycle, and one instructed on a Friday may not settle until Monday. The analyst should design duplicate detection around the end to end reference plus the amount plus the value date, and should test it with a deliberate duplicate in the test environment before go live. The scheme rules the analyst must check. Four rules decide whether an SCT implementation is correct. The maximum execution time is one business day. The full amount must be credited, with no deductions in transit. The payment needs only the payee IBAN, and no bank identifier code has been required since 2016. The scheme covers euro payments inside the SEPA area. The analyst checks cut off times, pacs.008 validation, code mapping, and reconciliation of every pacs.002 against the original pain.001. A payment with no matching pacs.002 is a payment nobody is watching, and an unmapped reason code becomes a call to the service desk.

A credit transfer is a push payment. The payer tells their own bank to send a defined amount of euro to the payee, and the payee does nothing. The payer bank moves the money through the clearing system to the payee bank, and the payee bank credits the account. The scheme rulebook sets a maximum execution time of one business day, and the full amount must be credited. That last rule matters: no bank in the chain may deduct a charge from the amount, so the payee receives exactly what the payer sent.

Follow one payment end to end. A German manufacturing company in Munich needs to pay a French supplier in Lyon 25,000 euro for an invoice, and the payment must arrive by tomorrow. The company instructs the payment through its online banking portal at 10am on a Tuesday, giving the supplier name, the supplier IBAN, the amount of 25,000 euro, the invoice number as remittance information, and the end to end reference. The instruction reaches the payer bank as a pain.001, a customer credit transfer initiation. It carries the payer and payee names, the payee IBAN, the amount, the remittance information, and the end to end reference. A wrong field here is the most common cause of failure, and the bank validates the pain.001 before anything else happens.

The payer bank validates the instruction, then debits the payer. The bank checks that the IBAN is well formed with the MOD 97 check, that the account holds enough money, that the payment passes sanctions and fraud screening, and that it arrived before the daily cut off. If the checks pass, the bank debits the payer account 25,000 euro, accepts the payment, and the status becomes ACCP. If a check fails, the bank rejects the instruction at once and tells the payer through a pain.002 status report, with a reason code that says what failed. The debit is the point of no return for the payer: from this moment the money has left their account, and getting it back needs a return or a recall.

The payer bank sends a pacs.008 to the payee bank. The interbank leg is a pacs.008, a financial institution to financial institution customer credit transfer, carrying the debtor and creditor agents, the amount, and the remittance information. It travels through a clearing system, most often STEP2, the retail clearing system operated by EBA Clearing. Settlement between the banks happens through T2, the Eurosystem settlement system. While settlement is in process the status is ACSP, and on completion it becomes ACSC. The payer bank's account at its central bank is debited and the payee bank's account is credited, in central bank money, and the net position between the two banks is settled as part of the STEP2 cycle.

The payee bank credits the payee account in full. On receipt, the payee bank checks that the creditor IBAN belongs to an open account and that nothing blocks the credit. It then credits the full 25,000 euro, with no deduction, and the status becomes ACCC. The customer can be told about the credit with a camt.054 notification, and the credit appears on the statement reported in a camt.053. Every step leaves a trail for operations and reconciliation: the pain.001 from the customer, the pacs.008 between the banks, the pacs.002 status reports at each stage, and the camt.053 statement at the end. An operations team that can follow that trail can answer any customer question about where the payment is.

The debit and credit entries are worth writing down. On the books of the payer bank, the payer's account is debited 25,000 euro and the bank's settlement account is credited. On the books of the clearing system, the payer bank's position is debited and the payee bank's position is credited. On the books of the payee bank, the settlement account is debited and the payee's account is credited 25,000 euro. Every entry balances, and the full amount arrives because no bank in the chain is allowed to deduct a charge. If a bank did deduct a charge, the payee would receive less than 25,000 euro, the payment would breach the scheme rule, and the payer bank would have to make up the difference.

Cut offs decide which day the payment settles. The payer bank has a daily cut off for SCT payments, and a payment instructed before the cut off is sent to the clearing system the same day and settled the next business day at the latest. A payment instructed after the cut off waits for the next clearing cycle. A payment instructed on a Friday may not settle until Monday, because Saturday and Sunday are not business days for SCT settlement. The analyst must show the cut off in the product, state the value date clearly, and warn the customer when a payment instructed now will not settle until after the weekend. A supplier who expected the money on Friday and receives it on Monday will call, and the operations team must be able to explain the cut off.

Rejects stop the payment before the money moves. When a payment cannot be delivered, the payee bank or the clearing system reports it with a pacs.002 carrying status RJCT and a reason code. Common codes are AC01 for an incorrect account number, RC01 for a wrong bank identifier, AG01 for a forbidden transaction, AM04 for insufficient funds, and FF01 for an invalid file format. The payer bank passes the rejection back in a pain.002, and the payer must correct the instruction and resubmit it. A reject is the cheapest failure, because the money never left the payer's account, and the analyst should design the rejection message to say exactly what is wrong and what the payer should do next.

Returns send the money back after settlement. A return happens after settlement when the payee bank cannot credit the payment, and it travels back as a pacs.004, a payment return. Typical codes are AC04 for a closed account, AC06 for a blocked account, MD07 for a deceased account holder, and AG01 for a forbidden transaction. The payee bank returns the full original amount, 25,000 euro in our example, and the payer bank credits the payer. The reason code decides whether the payment can simply be sent again: a closed account means the payer needs new details, while a blocked account may mean the payer should try again later. The analyst must map each return code to an action and a customer message.

Recalls ask for the money back after it has been credited. When a payment was sent by mistake, duplicated, or sent to the wrong payee, the payer bank asks for it back with a camt.056 cancellation request. The payee bank answers with a camt.029, a resolution of investigation, and must ask the payee for consent first, because the credit is now the payee's money. If the payee agrees, the funds come back as a pacs.004 return. A refusal means no automatic recovery, and the payer must pursue the matter directly with the payee. The analyst must make this clear to customers: a recall is a request, not a reversal, and the payee can say no.

Duplicates and cut off times cause the failures analysts see most. A duplicate carries the same end to end reference, amount, and value date as an earlier payment, and it is rejected with reason code AM05. Duplicate detection must run at the payer bank before the pacs.008 is sent, because stopping one after settlement means a return or a recall. A payment instructed after the daily cut off waits for the next clearing cycle, and one instructed on a Friday may not settle until Monday. The analyst should design duplicate detection around the end to end reference plus the amount plus the value date, and should test it with a deliberate duplicate in the test environment before go live.

The scheme rules the analyst must check. Four rules decide whether an SCT implementation is correct. The maximum execution time is one business day. The full amount must be credited, with no deductions in transit. The payment needs only the payee IBAN, and no bank identifier code has been required since 2016. The scheme covers euro payments inside the SEPA area. The analyst checks cut off times, pacs.008 validation, code mapping, and reconciliation of every pacs.002 against the original pain.001. A payment with no matching pacs.002 is a payment nobody is watching, and an unmapped reason code becomes a call to the service desk.

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