Payments Interview Questions

Common Interview Questions:

Now that the payments job market is booming and there are lot of interviews happening, I thought of compiling a list of questions that you might get in an interview.

Note: This list is not exhaustive and must be used at the final stage of preparation.

Most of these questions were directed at me during my years of being interviewed. If you know the answers to all of these, then you should be good 😊

1. What is SWIFT? Answer: SWIFT stands for Society for Worldwide Interbank Financial Telecommunication. It is a co-operative of banks that provide the infrastructure and standards for the exchange of payment messages, especially in the cross-border space. SWIFT has a proprietary message type called MT messages.
2. What are the differences between SWIFT and SEPA? Answer: SEPA stands for Single Euro Payments Area which was created by the European Union to make the exchange of payment within the EU easy. SEPA deals with only payments in EURO currency. SEPA uses a version of the ISO20022 standard for the exchange of funds. You can now compare it with SWIFT
3. What are the message types that you know? Answer: The most popular ones are SWIFT MT, SEPA PACS, PAIN and CAMT, SFMS (India), Fedwire Funds Service message format
4. What are NOSTRO, VOSTRO and LORO accounts? Answer: http://www.paymentsdomain.com/2021/05/29/accounting-entries-in-payments/
5. What are the different series of MT messages you know? Answer: For payments, it’s generally 1 series, 2 series, and 9 series.
6. What does MT stand for? Answer: MT stands for Message Type. It is the propritary message standards developed by SWIFT.
7. What is an MT103? Answer: It is a customer credit transfer payment message used to transfer funds bank cutomer funds. More details https://www.youtube.com/watch?v=iWcZlaDGYIU
8. What is the difference between serial and cover methods? Answer: https://www.paiementor.com/swift-serial-and-cover-payments/
9. What is RMA and accounting relationship? Answer: http://www.paymentsdomain.com/2021/06/18/misc-payment-concepts/
10. Explain the full flow of a MT103 when payment is sent via. Serial method? Answer : https://www.paiementor.com/swift-mt103-serial-payment-analysis-1-3/
11. Explain the full flow of a MT103 when payment is sent via. Cover method? Answer : https://www.paiementor.com/swift-mt103-202-cover-payment-analysis-part-1/
12. When are the following message types used MT200, MT201, MT202, MT202 COV, MT203, MT210? Answer : MT200 – Is a message used by a bank to transfer funds from one of its account to another account of theirs with another banks. MT201 – It is multiple MT200s in a single message MT202 – This message is used by a bank to send money to anoter bank. All parties shouls be banks. MT202COV – It is a MT202 that is used to cover funds of an underlying payment message like an MT103 Announcement. MT203 – Multiple 202s MT210 – It is a notice to the receiver that the funds are on the way.
13. What is the difference between MT202 and MT202 COV? Functionally and field wise Answer: MT202COV covers funds of an underlying payment while MT202 is not. MT202 willl have tag21 data as “Nonref” or empty whle MT202COV will have the reference (tag20) of the underlying payment in tag21. MT202COV will contain MT103 details.
14. What is a MT101? Is it mandatory? Answer: MT101 is an instruction message sent by the customer to the bank to initiate a payment . It is not mandatory but is recommended.
15. How will you (as a bank) send a payment to the beneficiary’s bank if there is no RMA? Answer: Route the paymet using the serial method via your correspondent.
16. Explain the accounting entries of payment flow? Answer: http://www.paymentsdomain.com/2021/05/29/accounting-entries-in-payments/
17. What are the different CSMs you have worked in? Answer: Based on your experiece 🙂
18. What is RTGS and NET settlement? Answer: http://www.paymentsdomain.com/2021/05/14/parties-in-a-payment-system/
19. What are instant payments? Answer: Payments that are executed and completed withing a matter of Seconds . Example SCT Inst (Europe), UPI (India)
20. What is the equivalent of MT101, MT103, MT202 in SEPA? Answer: MT101 – Pain.001, MT103 – Pacs.008, MT202 – Pacs.009
21. Can you explain flow of messages for a positive scenario in SEPA? Answer: http://www.paymentsdomain.com/2021/08/21/sct-happy-path/
22. Can you explain the recall flow in SEPA? Answer : https://www.paiementor.com/the-messages-exchanged-in-the-sepa-credit-transfer-scheme/
23. What is the equivalent of MT940, MT941, MT942 in SEPA? Answer: MT940- Camt.053 , MT941 and MT942 – Camt.052
24. What are MT910s and MT900s? Answer: MT910 – Confirmation of credit it is a message sent by the bank to its customer information money is credited to their account. MT900- Confirmation of debit. It is a message sent by the bank to its customer information money is debited from their account.
25. Can you explain about SWIFT T copy and Y copy services? Answer: https://www.swift.com/swift-resource/13521/download
26. What is input credit file in SEPA?
27. Can you explain SEPA direct debit flow? Answer: https://www.paiementor.com/iso-20022-messages-exchanged-in-the-sdd-schemes/
28. What are the different charges in a SWIFT MT103 message? Answer: http://www.paymentsdomain.com/2021/06/12/charges-and-forex-fx/
29. What are the different client channels from which payments are received? Answer: Broadly client channels are classified into online and offline channels. There are dedicated channels for corporate customers and private customers. Example of online channels Netbanking and mobile banking portals. Offline channels : Bank branch.
30. What are the different checks performed in a payment engine? Answer : http://www.paymentsdomain.com/2021/06/05/payment-engines/
31. What is STP? and 4EV? Answer : http://www.paymentsdomain.com/2021/06/05/payment-engines/
32. Explain about the Sanction checks performed during payment processing
33. What is SSI? Answer: SSI stands for Standing Settlement Instruction. These are agreements with other banks on how to settle funds. It will tell you who the EUR correspondent of the receiver bank is ? so that you can route the payment with them. I will explain why it’s done this way.
34. What is SWIFT REF Service? Answer: These are a set of services provided by SWIFT. Kindly refer to SWIFT’s official website for the latest details.
35. What is open banking? Answer: It is a concept where banks have to open up cutomer’s data to third parties. These third parties can provide different services to the customers after getting consent fromt the customer to access their account.
36. Who are indirect participants of a settlement system? Answer: http://www.paymentsdomain.com/2021/07/25/sepa-clearing-and-settlement/
37. Can you explain the structure of a BIC code? Answer : http://www.paymentsdomain.com/2021/06/18/misc-payment-concepts/
38. Can you explain the different blocks of a SWIFT message? Answer : https://www.paiementor.com/swift-mt-message-structure-blocks-1-to-5/
39. What is ISO20022 and can you explain the advantages of its use ? Answer : There are three major advantages 1. Rich data 2. Increased automation 3. Interoperability
40. Can you explain the reject/return flow? Answer: If a credit transfer message is received from a bank and it has incorrect data or if the receiving bank is not able to complete the payment processing then the payment is rejected and a reject/return message is send. If that payment is not booked then reject is sent but if the payment is booked then a return message is sent.
41. What are MT103 rejects and return? Answer : The concept is the same as question 40 but Tag72 field will contain the code word /REJT or /RETN
42. What are the different types of charges in a payments and can you explain in detail about them? Answer : http://www.paymentsdomain.com/2021/06/12/charges-and-forex-fx/
43. Can you explain about the FX functionality in payment processing? Answer: http://www.paymentsdomain.com/2021/06/12/charges-and-forex-fx/

Apart from these if the interviewer really wants to test you then he/she will dive deep into each tag of SWIFT messages and at this point if you are not from operations BG or have done multiple swift implementations then you might find it difficult. This is a very rare case of course so don’t worry.

All the best!! Waiting to hear the good news that you got selected 😊