Sepa Credit Transfer – Happy Path

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Sepa Credit Transfer – Happy Path:

Now that we understand the primary actors of the 4 corner model it is time to seal that understanding by taking an example of the happy path of an Sepa Credit Transfer scheme. We will discuss about the different messages that are involved and in which order they are exchanges between the different actors.

Sepa credit transfer

Before we decipher the above picture for ease of understanding I have made the following assumptions

  1. The payment is initiated by a private customer some like you and me
  2. The payment is processed by a CSM containing only the two banks involved
  3. Payments are not cleared in Batch
  4. Customers receive notification from the bank Via. SMS/email

Step 1: Customer (Originator) logs into their internet banking portal, enters the details of the beneficiary and initiates payment.

Step 2: The IT system of the bank (Originator PSP) converts the customer’s instruction into a pain.001 messages and sends into the bank’s payment engine.

Step 3: Originator PSP’s payment engine processes the payment instruction received from the originator by performing different checks that include balance checks.

Step 4: Originator PSP recognizes that the beneficiary belongs to another bank (Beneficiary PSP). It debits the Originator’s account and sends a pacs.008 message as per the rule of the SCT scheme Via CSM.

Step 5: CSM validates & settles the payment. It forwards the pacs.008 to the beneficiary bank.

Step 6: Beneficiary PSP receives the pacs.008 from the CSM validates the payment and completes the processing.

Step 7: Funds are made available to the beneficiary.   

What are these pain.001 and pacs.008 messages that I talk about ?? To get an answer to this question please refer to my earlier article on the SEPA payment messages.

Do ckeck out the SEPA rulkebook and the next article Reject flow

Blog Comments

Hi Santhosh,
So the Pain messages are generated by the IT system and not by the payment engine..? Also whether the pain message will be generated prior to checking the debtors account balance..?
Pls clarify.

Hello Denees,

Individual customers do not generate Pain.001 messages it is generated by the IT system and not the payment engine. Corporate customers generate pain.001 messages and send them to the bank.

Regarding balance checks, There is a balance check done during the payment initiation and during the processing of the payment by the payment engine.
Since the focus of this article is not payment flow and not the customer UI it was not mentioned. Hope this answered your question.

Hi Denees,

Santhosh already clarified and just to add that retail customers use different channels i.e. Internet Banking to initiate payment instruction to their bank. Similarly corporate customers can initiate pain.001 from Corporate channels.

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