| Field | Meaning | Required |
|---|---|---|
:20: | A unique reference assigned by the sending bank for this advice. It identifies the advice in both banks systems and lets operations teams trace it. It must not | M |
:21: | The reference of the original collection or cheque instruction that this advice relates to. It links the payment advice to the collection the beneficiary bank i | M |
:25: | The account that was credited with the payment, identified by account number. It tells the receiver exactly which account received the funds. A wrong account nu | O |
:32A: | The value date, ISO currency code and amount of the payment, for example 261106EUR48250,00. The receiver compares it with its expected collection amount to conf | M |
:52a: | The institution that ordered the payment, when it differs from the sender of the MT400. It identifies the true originator of the payment instruction. The field | O |
:53a: | The bank that presented the cheque or collection for payment. It identifies the presenting bank in the collection chain. The receiver uses it to confirm the pay | O |
:50a: | The drawer of the cheque or the party that issued the collection instruction. It gives the name and account of the party whose funds were used. The receiver use | O |
:59a: | The beneficiary of the payment, identified by account number and name. The receiving bank credits this party on the value date. The field confirms the funds rea | M |
:72: | Additional information from sender to receiver, such as a narrative explaining the payment or a code for the payment type. It can carry the cheque number or the | O |
:71B: | Details of any charges deducted from the payment, with the charge type and amount in free text. It explains why the advised amount differs from the original col | O |
:30: | The date on which the cheque or collection was paid, when it differs from the value date in field 32A. It tells the receiver when the payment was actually made. | O |
Harbour Bank sends an MT400 to Meridian Bank advising payment of EUR 48,250.00 on 6 November 2026 for collection reference COLL99214, drawn on a Madrid corporate. The related reference matches the outstanding collection, the value date matches the payment date, and Meridian credits the beneficiary and closes the collection.
Valid example from the message catalogue. Scheme rules: MT400 follows the SWIFT collection and cheque advice rules and remains in use for documentary collections and cheque clearing, which have no ISO 20022 equivalent in general use. Domestic cheque cleari
Roles: Remitting Bank and Collecting Bank
What you will learn
Your objective. By the end of this lesson, you will be able to explain roles: remitting bank and collecting bank. The remitting bank is the exporter bank, the bank to which the exporter entrusts the documents and the collection instruction.
Why it matters. If the instruction says release documents only against payment of EUR 95,000, the collecting bank must not release them for EUR 90,000, or against a promise to pay next week.
Chapter objective: Learner explains documentary collections, the roles of remitting and collecting banks, and the SWIFT Category 4 messages used at each stage. Learner uses real examples with amounts, banks and message names to show how the topic works in practice.
Key learning points
- Remitting bank
- Its duty
- Collecting bank follows instructions
- Instruction says release documents only against payment
- Santander contacts the Madrid importer
- Collecting bank sends by MT103
Key terms
Reconciliation: The process of comparing records from two sources, such as a bank statement and an internal ledger, to confirm they agree.
MT400: A SWIFT message used to advise a bank of the collection of a documentary credit or a bill, and to request payment or acceptance.
SWIFT: The Society for Worldwide Interbank Financial Telecommunication, a member owned cooperative that provides secure messaging services for financial institutions.
SWIFT MT message viewer showing Roles: Remitting Bank and Collecting Bank.
Practise this lesson
Exercise
Trace the payment in this lesson through its lifecycle stages.
Use the lifecycle stages in this lesson: acceptance, processing, clearing, settlement, beneficiary credit, ledger posting and reconciliation.
- What to do. Name each stage, state what happens, and say when the payment is truly final.
Correct result. Acceptance validates the instruction. Processing prepares it. Clearing sorts and nets it. Settlement moves the funds. Beneficiary credit puts the money in the creditor account. Ledger posting records it. Reconciliation proves it. Finality is only at settlement, not at acceptance or at status update.
Why. The lifecycle is the map of a payment. If you cannot say which stage a payment is in, you cannot answer where the money is.
Check your understanding
Practice question
Which of the following best describes roles: remitting bank and collecting bank?
Takeaway and next step
What to remember
The collection instruction, the advice of payment and the remittance of funds are separate steps, and each one needs its own message, reference and reconciliation.
Build a cross-border payment like the one in this lesson and watch the chain, the charges, and the final amount change.
Open the Cross-Border Payment Configurator →
Builds on "What a Documentary Collection Is".
Transcript and full text
Show transcript
The remitting bank is the bank to which the exporter, the principal, has entrusted the handling of the collection. The exporter gives the documents and the collection instruction to the remitting bank, and the remitting bank sends them to the collecting bank in the importer country. The remitting bank is normally the exporter own bank, in the exporter country. Its duties under URC 522 are to check that the instruction is complete, to forward the documents and the instruction to the collecting bank without delay, and to remit the proceeds to the exporter when they arrive. The remitting bank does not examine the documents for compliance, and it does not guarantee payment. Its role is to transmit and to collect. The collecting bank is the bank in the importer country that receives the documents from the remitting bank and presents them to the importer, the drawee. The collecting bank may be a correspondent of the remitting bank, or it may be a bank the importer nominates. Its duties under URC 522 are to present the documents to the drawee without delay, to release the documents only against payment or acceptance as instructed, to protest the bill of exchange if the drawee refuses to pay or accept, and to remit the proceeds to the remitting bank. The collecting bank is the bank that faces the importer, and it is the bank that must handle a refusal, a partial payment, or a request for more time. The presenting bank is a further role that sometimes appears. When the collecting bank is not in the same city as the drawee, it may ask another bank, the presenting bank, to present the documents to the drawee. The presenting bank acts on behalf of the collecting bank, and it follows the same instruction. The distinction between the collecting bank and the presenting bank matters for the message flow, because the MT400 advice of payment is sent by the collecting bank to the remitting bank, and the presenting bank does not send it. An SME who reads a collection case should identify which bank is the remitting bank, which is the collecting bank, and whether a presenting bank is involved, because the responsibilities and the message flow depend on those roles. The principal is the exporter, the party that entrusts the collection to the remitting bank. The principal gives the instruction, and the instruction states the documents, the amount, the terms of release, and what to do if the drawee refuses. The drawee is the importer, the party on whom the bill of exchange is drawn, and the party to whom the documents are presented. The drawee pays or accepts, and then receives the documents. The drawer is the exporter, who draws the bill of exchange. The payee is the party to whom the bill is payable, normally the exporter or its bank. These roles are defined in URC 522, and they should be used precisely, because a confusion between the collecting bank and the presenting bank, or between the principal and the drawer, will cause a misunderstanding in the instruction. The banks duties under URC 522 are limited, and an SME must understand the limits. The bank must act in good faith and exercise reasonable care. It must follow the instruction. It must present the documents without delay. It must not release the documents except against payment or acceptance as instructed. It must advise the remitting bank if the drawee refuses. But the bank is not liable for the genuineness, the accuracy, or the legal effect of the documents. It is not liable if the goods do not match the documents. It is not liable if the drawee refuses to pay. The bank liability is for its own handling of the collection, not for the underlying trade. An exporter who thinks the bank guarantees payment has misunderstood the method. The commission structure is agreed between the principal and the remitting bank, and between the remitting bank and the collecting bank. The remitting bank normally charges the principal a collection commission, and the collecting bank charges a commission that it deducts from the proceeds or charges to the remitting bank. The instruction should state who pays the collecting bank charges, and the collecting bank should not deduct charges that the instruction says the drawee will pay. A dispute over charges is one of the most common problems in a collection, and it is avoided by stating the charge arrangement clearly in the instruction, using the same OUR, SHA, and BEN logic as in a payment message. For a business analyst, the roles requirement must state each party, each bank, and the message that connects them. The requirement should say that the principal gives the instruction to the remitting bank, that the remitting bank sends the documents and the instruction to the collecting bank by courier and by SWIFT, that the collecting bank presents the documents to the drawee, that the collecting bank releases the documents only against payment or acceptance, and that the collecting bank sends the MT400 advice of payment to the remitting bank when the proceeds are received. A system that cannot distinguish the remitting bank from the collecting bank cannot process a collection correctly.
The remitting bank is the bank to which the exporter, the principal, has entrusted the handling of the collection. The exporter gives the documents and the collection instruction to the remitting bank, and the remitting bank sends them to the collecting bank in the importer country. The remitting bank is normally the exporter own bank, in the exporter country. Its duties under URC 522 are to check that the instruction is complete, to forward the documents and the instruction to the collecting bank without delay, and to remit the proceeds to the exporter when they arrive. The remitting bank does not examine the documents for compliance, and it does not guarantee payment. Its role is to transmit and to collect.
The collecting bank is the bank in the importer country that receives the documents from the remitting bank and presents them to the importer, the drawee. The collecting bank may be a correspondent of the remitting bank, or it may be a bank the importer nominates. Its duties under URC 522 are to present the documents to the drawee without delay, to release the documents only against payment or acceptance as instructed, to protest the bill of exchange if the drawee refuses to pay or accept, and to remit the proceeds to the remitting bank. The collecting bank is the bank that faces the importer, and it is the bank that must handle a refusal, a partial payment, or a request for more time.
The presenting bank is a further role that sometimes appears. When the collecting bank is not in the same city as the drawee, it may ask another bank, the presenting bank, to present the documents to the drawee. The presenting bank acts on behalf of the collecting bank, and it follows the same instruction. The distinction between the collecting bank and the presenting bank matters for the message flow, because the MT400 advice of payment is sent by the collecting bank to the remitting bank, and the presenting bank does not send it. An SME who reads a collection case should identify which bank is the remitting bank, which is the collecting bank, and whether a presenting bank is involved, because the responsibilities and the message flow depend on those roles.
The principal is the exporter, the party that entrusts the collection to the remitting bank. The principal gives the instruction, and the instruction states the documents, the amount, the terms of release, and what to do if the drawee refuses. The drawee is the importer, the party on whom the bill of exchange is drawn, and the party to whom the documents are presented. The drawee pays or accepts, and then receives the documents. The drawer is the exporter, who draws the bill of exchange. The payee is the party to whom the bill is payable, normally the exporter or its bank. These roles are defined in URC 522, and they should be used precisely, because a confusion between the collecting bank and the presenting bank, or between the principal and the drawer, will cause a misunderstanding in the instruction.
The banks duties under URC 522 are limited, and an SME must understand the limits. The bank must act in good faith and exercise reasonable care. It must follow the instruction. It must present the documents without delay. It must not release the documents except against payment or acceptance as instructed. It must advise the remitting bank if the drawee refuses. But the bank is not liable for the genuineness, the accuracy, or the legal effect of the documents. It is not liable if the goods do not match the documents. It is not liable if the drawee refuses to pay. The bank liability is for its own handling of the collection, not for the underlying trade. An exporter who thinks the bank guarantees payment has misunderstood the method.
The commission structure is agreed between the principal and the remitting bank, and between the remitting bank and the collecting bank. The remitting bank normally charges the principal a collection commission, and the collecting bank charges a commission that it deducts from the proceeds or charges to the remitting bank. The instruction should state who pays the collecting bank charges, and the collecting bank should not deduct charges that the instruction says the drawee will pay. A dispute over charges is one of the most common problems in a collection, and it is avoided by stating the charge arrangement clearly in the instruction, using the same OUR, SHA, and BEN logic as in a payment message.
For a business analyst, the roles requirement must state each party, each bank, and the message that connects them. The requirement should say that the principal gives the instruction to the remitting bank, that the remitting bank sends the documents and the instruction to the collecting bank by courier and by SWIFT, that the collecting bank presents the documents to the drawee, that the collecting bank releases the documents only against payment or acceptance, and that the collecting bank sends the MT400 advice of payment to the remitting bank when the proceeds are received. A system that cannot distinguish the remitting bank from the collecting bank cannot process a collection correctly.
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