The pacs.008 Settlement Method element within the Group Header Settlement Information, includes one of the embedded codes to indicate how the payment message will be settled.
D
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The Settlement Method element in the pacs.008 allows a choice of an embedded code.
INDA indicate this Customer Credit Transfer will be settlement by the Instructed Agent (as the Account Servicing Institution) The account held at the Instructed Agent may captured in the dedicated Settlement Account element.
INGA indicate this Customer Credit Transfer has already been settlement by the Instructing Agent, who has credited the Account they service for the Instructed Agent (as an Account Owner). The account held by the Instructed Agent with the Instructing Agent may captured in the dedicated Settlement Account element.
pacs Settlement Method - explained
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(Account Owner).
The Account Owner can be an Agent or another Party.
Traditionally an interbank account relationship may have been referred to as a Nostro/Vostro relationship or an Agent's account held on another Agent's books/ another Agent's account held on my books.
Typically the commonality of this can be simplified to the Agent who provides the official Account statement is servicing the account and therefore is the Agent responsible for performing the settlement.
Why is it so important to understand which Agent Services the account ?
In ISO 20022, much like the legacy FIN process, each leg of a payment has a settlement component. Commonly one of these settlement legs occurs over a Market Infrastructure, who typically owns or instructs the settlement between the two Market Infrastructure participant Agents at a national Central Bank. In this case the Central Bank services both the Instructing Agent and InstructedAgent accounts which is represented by CLRG in the Settlement Method of a pacs message.
In a number of business Use Cases there are examples of additional legs, which may occur prior to or after a potential Market Infrastructure, where an Agent is responsible for the role to service an account and perform settlement of that leg.
This role is important as it determines the subsequence message behaviour.
pacs Settlement Method – INDA versus INGA
| INGA |
The relationship between the settlement of a payment leg and the message process flow is an important one. The state of settlement influences further messages in the process flow.
The pacs message sent by the Instructing Agent to the Instructed Agent has already been settled. D
Instructing Agent may (for example) send 27
• a pacs.002 to the Previous Agent with status ACSC Accepted Settlement Complete.
• a camt.053 Customer Statement to the Instructed Agent (as Account Owner)
Instructed Agent can not Reject the pacs message received as it has already settled. The inability to process the pacs message further by the Instructed Agent must result in a pacs.004 Payment Return (which in turn triggers a Reverse Indicator on the Account Owners statement).
Creditor Agent having performed the settlement on the Creditor's account, camt reporting message may be used to report or notify on this credit entry.
| INDA |
The pacs message sent by the Instructing Agent to the Instructed Agent has not been settled.
Instructing Agent may (for example) send
• a pacs.002 to the Previous Agent with status ACSP Accepted Settlement in Progress
Instructed Agent may
• Reject the pacs message received, using a pacs.002, as it has not been settled.
• a camt.053 Customer Statement to the Instructing Agent (as Account Owner) Although an rejected entry will not appear in the camt.053
Creditor Agent of a pacs.009 (particularly in the cover scenario) may forward the pacs.009 to the Creditor, as the Creditor will perform the settlement (they are the Account Servicing Institution)
| CLRG |
The pacs message sent by the Instructing Agent to the Instructed Agent has not been settled. Settlement is performed by the Market Infrastructure.
Instructing Agent may (for example) send
• a pacs.002 to the Previous Agent with status ACSP Accepted Settlement in Progress
Instructed Agent may
• can not Reject the pacs message received as it has already settled. The inability to process the pacs message further by the Instructed Agent must result in a pacs.004 Payment Return.
Market Infrastructure may
• Reject the pacs message received, using a pacs.002, as it has not been settled.
• a camt.053 Customer Statement to the Instructing Agent and Instructed Agent (as Account Owners)
| INGA |
High Level INGA message example
| INDA |
High Level INDA message example
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