Business Processes: Customer-to-bank payment order

This diagram pictures the high level end-to-end payments Business Processes. The first drill down includes the customer-to-bank payment. The aim of the below is to describe the high-level scope of the project, not to be exhaustive.

Process Customer-to-bank payment

• Definition: This business process bundles all underlying sub-processes which are all related to the initiation and handling of customer-to-bank payments. The sub-processes are:
  • order customer-to-bank payment
  • accept customer-to-bank payment
  • clear customer-to-bank payment
  • settle customer-to-bank payment.

Order customer-to-bank payment

• Definition: an initiating party orders to its financial institution (debtor agent or forwarding agent) a payment related and possibly referring to the underlying business transactions (for example, invoices).
• Trigger: decision has been made to make a payment (either by a person or a system)
• Pre-condition: the required (identifying) information is available to make a payment.
• Post-condition: The initiation party sends a CustomerCreditTransferInitiation message to the forwarding agent or debtor agent.

Authorize customer-to-bank payment

• Definition: the authorization of a payment order by the initiating party. (An authorization may be implicit if the system where the payment is generated has been approved to generate payments, as the preceding procedures are deemed satisfactory secure. The system will then generate a digital signature without manual intervention. An authorization may be explicit, if procedures require human approval. The representation of this approval will be included in the payment order or sent to the forwarding or debtor agent as a separate message.)
• Trigger: a payment order has been created.
• Pre-condition: the order payment process has completed and waits for authorization.
• Post-condition: the payment order is authorized

Accept customer-to-bank payment

• Definition: The payment acceptation includes the checking of the authorization, the validation of the payment and the process risk assessment.
• Trigger: receipt of a payment order.
• Post-condition: the payment order has been accepted or rejected.

Check Authorization customer-to-bank payment

• Definition: The forwarding or debtor agent checks if initiating party is allowed/entitled to do so as included in the authorization specifications of the customer profile and the type of payment is in scope. Note: Authorization procedures are in some countries required for legal reasons
• The result of these authorization procedures can, depending on the authorization scenario defined, be included in the payment initiation order (e.g. one or more signatures included in the payment initiation order), or can result in a dissociated authorization message, sent by another party than the initiating party, which is referring to the payment initiation message.
• Trigger: established authorization procedures.
• Post-condition: the payment will be accepted or rejected for validation and, when applicable, risk assessment

Validate customer-to-bank payment

• Definition: syntactical check in order to process the payment further.
• Pre-condition: the agent has received the payment order and performed the necessary authorization checks. Validation procedures have been established.
• Trigger: receipt of payment order, positive authorization check.
• Post-condition: the payment will be accepted for risk assessment, if necessary, or is executable.

Assess customer-to-bank payment risk

• Definition: necessary risk checks in order to execute and process the payment further. It can be 'assess static risk' (e.g. checking of embargo) and 'assess dynamic risk' (check sufficient cash on account, cover received,…).
• Pre-condition: the payment has been validated and risk criteria have been established.
• Trigger: receipt of payment order, positive authorization and validation check.
• Post-condition: the payment or is executable (all information is there to process the payment and the payment risk assessment had been checked).

Generate regulatory reporting information

• Definition: information from the payment transaction necessary to meet regulatory reporting requirements (for example, balance of payments reporting, reporting on money-laundering issues,…)
• Pre-condition: there are regulatory reporting requirements.
• Trigger: the payment meets regulatory reporting criteria.
• Post-condition: information for the regulatory reporting has been extracted based in the information in the payment.

Clear customer-to-bank payment

• Definition: The agent remits the payment and prepares the information for the next agent in the interbank chain by sorting it and release it for onward interbank payment processing.
• Pre-condition: the payment is accepted, the next credit party is not the creditor and the next clearing agent is determined.
• Trigger: execution date.
• Post-condition: onward interbank payment processing

Settle customer-to-bank payment

• Definition: credit transfer between the debit party and the credit party
• Pre-condition: instructed payment is executable (all information is there to process the payment and the payment validity has been checked)
• Trigger: execution date.
• Post-condition: transfer of ownership is performed between the debit party and the credit party.

Customer-to-bank direct debit

This diagram pictures the high level Direct Debit end-to-end payments Business Processes. The first drill down includes the customer-to-bank payment. The aim of the below is to describe the high-level scope of the project, not to be exhaustive.

Initiate collection of Direct Debit

• Definition: the Creditor will create the first/one-off Direct Debit instruction and send it to its bank. This first/one-off Direct Debit will differ from subsequent (recurrent) Direct Debit transactions:

The first/one-off Direct Debit instruction may be sent a number of days (as defined in the operating rules) in advance of the settlement date.

In addition to the regular debiting information, which may include the unique mandate reference and the Creditor identification, the first/one-off debit instruction may also include information that identifies it as a first Direct Debit under a new mandate or as a one-off transaction

• Trigger: Initiation of the collection
• Pre-condition: Consensus to use Direct Debit as payment method and Debtor authorization to be debited by the Creditor, Notification of the Debtor
• Post-condition: Initiated collection of Direct Debit

Process reject

• Definition: Reconciles reject with the original Direct Debit instructions and identifies the reason for rejection. If the reject results from a formatting error, correct the data and resubmit for processing
• Trigger: Reconciliation of the Reject
• Pre-condition: Reject received
• Post-condition: Reconciled reject

Process return/request for refund

• Definition: Returns are individual debits that have reached the Debtor’s Agent and have been settled at the inter-bank level, but the Debtor’s Agent is then unable to make the collection for one of a number of reasons e.g. account closed, no funds, customer dead, etc.
• The Debtor has the unconditional right during "n" days after a debit to instruct its bank to revoke the debit. Following that instruction the Debtor's account is credited by his bank and the debit is returned electronically through the clearing process to the Creditor’s Agent.
• Trigger: Return of a Direct Debit / Request for refund
• Pre-condition: Settled Direct Debit instruction subject for return / refund
• Post-condition: Returned Direct Debit instruction / Requested Refund

Process reversal

• Definition: Creditor identifies the original Direct Debit instruction (or a file of Direct Debit instructions) and generates an offsetting transaction in favor of the Debtor under quotation of the reversal reason.
• Trigger: Reversal of the Direct Debit Instruction
• Pre-condition: Settled Direct Debit instruction subject to reversal (collected in error)
• Post-condition: Reversed Direct Debit Instruction

Business Activities: Customer-to-bank payment order