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EBA Scheme for Priority Payments 2007

Business Practices Version 2.0

3EBA Scheme for Priority Payments 2007 // Business Practices Version 2.0 // 16th May 2007

The Euro Banking Association (“EBA”) launched the initiative towards the defini-tion of a priority payments scheme in the course of 2003. The present documentreflects the outcome of the works of the EBA on the description of conditions al-lowing for the processing of credit transfers throughout SEPA within a timeframeof four hours.

The EBA wishes to make the present document available to credit institutions lo-cated in SEPA with the aim to encourage banks to apply the scheme conditionsdescribed herein. The EBA Priority Payments scheme is launched by means ofa suggested industry practice, and banks wishing to apply the same register on adatabase (central repository), which will be maintained and published through theEBA.

It will be the expectation that banks registering in the central repository will applythe conditions of the scheme. Any queries or disputes arising in connection withthe application of the scheme conditions by the sending and/or receiving bankshall be the sole responsibility of the banks involved in a particular transaction.Dispute resolution shall take place between the banks concerned on a bilateralbasis.

The present document does not give rise to contractual obligations nor to legallybinding commitments and is not intended to constitute a legally binding document.

The Euro Banking Association, including its officers, directors, employees, andagents shall incur no liability in connection with the participation in and use of thescheme by any one or more persons or entities, nor for any information, statement,action, omission or decision by any participant in the scheme in its relationship withother scheme participants or with any other third party (including customers ofparticipants in the scheme) or any direct or indirect consequences thereof. Theparticipants in the scheme shall be solely responsible for ensuring that the infor-mation posted on the central repository is correct and accurate and for maintainingsuch information up to date.

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4 EBA Scheme for Priority Payments 2007 // Business Practices Version 2.0 // 16th May 2007

1. Introduction 5

2. Description of Responsibilities 62.1 Responsibilities of the originator bank towards the originator 62.2 Responsibilities of the originator bank

towards the beneficiary bank 72.3 Responsibilities of the beneficiary bank to the originator bank 82.4 Responsibilities of the beneficiary bank

to the beneficiary of the payment 82.5 Responsibilities on dispute resolution 9

3. The Priority Payments scheme 103.1 Message types 103.2 Flagging 103.3 Timeframes 103.4 Validation and rejections 113.5 Repairs, Rejects, Returns 123.6 Operating days 133.7 Delays caused by regulatory reporting obligations 133.8 Back-up arrangements 133.9 Charging principles 143.10 Participation conditions and registration 14

4. Schematic presentation of cut-off timesfor Priority Payment processing 15

5. Definitions 17

Timing Scheme 19

Table of Contents


The EBA has compiled a Priority Payments scheme for and between banks par-ticipating in the scheme, governing the delivery of urgent, individual and liquiditysupported euro payments from originating customer account to beneficiary cus-tomer account with same-day availability of funds and within a maximum of fourhours. These urgent STP payments are clearly distinct from the basic bulk pay-ments processed under CREDEURO or SEPACredit Transfer conditions and aredesigned to support a different market need on a pan-European level.

The Priority Payments scheme, for practical purposes and in a start-up phase,will be launched on a voluntary basis and is open to banks processing euro pay-ments in SEPA, including, for the avoidance of doubt, banks which are not mem-bers of the EBA.

The Priority Payment scheme is limited to EUR payments. However individualbanks may offer a service including conversion to another currency within thescheme conditions.

A priority payment is governed by specific processing conditions described in thispaper.

The Priority Payments scheme covers individual credit transfers in EUR:

� Issued by an originator bank to a beneficiary bank via MT 103+ with codeword SPRI in field 23B (see Appendix 1 extract from SWIFT User Handbookon MT 103+ and specifically Network Validation Rules C3 and C6, whereField 23B contains the code SPRI). The code can be used independently ofthe SWIFT Priority Service Level underlying SPRI, which will only apply if aparticipating bank also decides to complete the SWIFT Priority Service Levelagreement.

� Issued by the originator bank to a Payment Channel capable of meeting thescheme conditions within 1 ½ hours of acceptance of the payment instructionfrom the originator;

� Via a Payment Channel identified by the scheme participants for sending andreceiving a Priority Payment;

Registration in the scheme will be through a central repository database of partic-pants established by the EBA.

1. Introduction


The originator bank shall need to ensure that the conditions to be met by the cus-tomers when sending a payment instruction and the related responsibilities arecovered in the bilateral service agreement between the originator bank and theoriginator.

The originator should provide the originator bank with payment instructions suffi-cient for the bank to comply with the scheme conditions regarding data require-ments for a payment to be effected under the Priority Payments scheme.

The beneficiary shall be responsible for providing correct account information tothe originator thereby enabling the priority payment to be processed without repairor reject. Any balance of payments reporting information required for the credit ofthe payment should be made available to the beneficiary bank by the beneficiary.

The data requirements relating to a payment instruction under the scheme include:

� An indication to the originating bank that the product/service requested totransfer the value is to effect a payment under the Priority Payments scheme

� The name and IBAN or account number of the originator� The name and IBAN of the beneficiary as provided by its bank� The BIC of the beneficiary bank� The amount to be transferred expressed in EUR� The requested execution date for making the payment� The charging option ”SHA”� Optionally a reference of up to 4x35 characters (in line with individual service

level agreements) which can be used by both originator and beneficiary toidentify the payment

In the event that the originator fulfils the above conditions, the originator can ex-pect that the beneficiary will receive availability of the funds for the specified day.

Once the originator bank has advised the originator of the information require-ments for a Priority Payment, it will be the originator’s responsibility to ensure thatthe appropriate level of correct information is included in the instruction to enableprocessing of a Priority Payment.

An originator bank which receives payment instructions as above specified froman originator expecting to be executed under the Priority Payments schemeshould inform the originator as per individual service level agreements, if it is un-able to effect the payment as requested.

The conditions under which the originator bank validates receipt of instructionsand advises its customers are individually agreed between the originator bankand the originator and form part of each bank’s service offering and are not there-fore covered by the scheme.

2.1 // Responsibilities of theoriginator bank towardsthe originator

2. Description of Responsibilities


The originator bank is responsible for ensuring it selects the appropriate channelfor routing the payment and that sufficient funds are available over that channelfor the completion of the payment on the same day.

The conditions to be met at the level of the originator bank on receipt of an in-struction to send a Priority Payment under the scheme conditions are thereforelimited to:

� Checking that the structure of the IBAN quoted for the beneficiary is correct;� Using the “SHA” charging option only;� Labelling the payment instruction as a Priority Payment indicating ‘SPRI’ in

field 23B with optionally either ‘SDVA’ or ‘INTC’ in field 23E;� Submitting the Priority Payment to a Payment Channel capable of meeting

the scheme conditions within 1 ½ hours of acceptance of the instruction fromthe originator and before the stipulated cut-off time;

� Monitoring and ensuring the processing of the payment before the stipulatedcut-off time.

The originator bank must pass on Priority Payment instructions via MT103+ to aPayment Channel capable of meeting the scheme conditions for further deliveryto the beneficiary bank, within 1 ½ hours of acceptance of the instruction from theoriginator.

The originator bank is responsible to deliver the payment to the Payment Channelin a timely manner so that it will arrive at the beneficiary bank no later than 14h30CET.

Originator banks shall pass on to the beneficiary bank the information that theyhave received from the originator or derived from that information, to include:

� The tag SPRI in field 23B to indicate that the service requested is to effect apayment under the Priority Payments Scheme

� The name and IBAN or account number of the originator� The name and IBAN of the beneficiary� The BIC of the beneficiary bank� The amount to be transferred expressed in EUR� The settlement date for making the payment – credit value date� The use of “SHA” charging option in field 71 of MT103+� Reference information of the originator of up to 4x35 characters in an unal-

tered form

2.2 // Responsibilities of theoriginator bank towardsthe beneficiary bank


The originator bank is responsible for crediting the beneficiary bank with the fullprincipal amount.Originator banks are required to process instructions meeting the relevant condi-tions as a Priority Payment provided they meet the defined bank-to-bank messagestandards.

The originator bank is required to manage its operational participation in the uti-lized Payment Channel in such a manner as to enable timely processing of the Pri-ority Payment.

The beneficiary bank is responsible for making the full amount of the paymentavailable to the beneficiary on the same day as it received the payment and within1 ½ hours of receipt of the payment.

On condition that the EBA Priority Payment is received by 14h30CET, returns bythe beneficiary bank must be sent to the originator bank the same day no laterthan 16h00 CET. Failure to return the payment within this timeframe will enable theoriginator bank to consider the payment to be complete and that the Priority Pay-ment conditions will be met for the beneficiary.

The beneficiary bank must be able to receive a priority payment from start-up ofbusiness until 14h30 CET at the latest.

Upon receipt of the payment from the originator bank via a Payment Channel ca-pable of meeting the scheme conditions, and in accordance with the conditionspertaining to acceptance of a payment under the Priority Payments scheme, thebeneficiary bank is required to make the full principal amount of the payment avai-lable to the beneficiary on the same day and within 1 ½ hours of receipt of the pay-ment. The type, manner and timing of advice to the beneficiary form part of theservice offering of the beneficiary bank and are not covered by the scheme.

The beneficiary bank is responsible for making the funds available to the benefi-ciary and communicating the unchanged remittance data (as received from the ori-ginator bank) of up to 4x35 or the minimum number of characters if defined in theservice level agreement between the beneficiary bank and its customer.

The beneficiary bank will advice its customer of the incoming funds as per the in-dividual service level agreed with its customer. No specific advice mechanism isrequired.

2.3 // Responsibilities of thebeneficiary bank to theoriginator bank

2.4 // Responsibilities of thebeneficiary bank to thebeneficiary of thepayment


2.5.1 Originator and originator bank relationship

In the event that the originator is not satisfied with the service given by the origi-nator bank, the originator must address such a claim to the originator bank. Theoriginator bank is required to assess the claim and to forward it to the beneficiarybank if applicable. In the case of non-validity of the claim and the originator bankbeing in a position to prove that the Priority Payments scheme rules have beencomplied with during the full process of the payment transaction, expenses fordocumenting compliance may be billed to the originator.

In the case of a dispute between the originator and the originator bank, the servicelevel agreement between the two parties shall apply.

2.5.2 Beneficiary and beneficiary bank relationship

In the event that the beneficiary is not satisfied with the service given by the ben-eficiary bank, the beneficiary must address such a claim to the beneficiary bank.The beneficiary bank is required to assess the claim and to forward it to the orig-inator bank if applicable. In the case of non-validity of the claim and the beneficiarybank being in a position to prove that the Priority Payments scheme rules havebeen complied with during the full process of the payment transaction, expensesfor documenting compliance may be billed to the beneficiary.

In the case of a dispute between the beneficiary and the beneficiary bank, theservice level agreement between the two parties shall apply.

2.5.3 Originator bank and beneficiary bank relationship

Dispute resolution between the originator bank and the beneficiary bank shall bethe sole responsibility of the banks concerned.

2.5 // Responsibilities ondispute resolution


For the purposes of the scheme it is considered that interbank financial transfersalready receive same-day value and the message types are reserved for customerpayment instructions. Consequently, the only messages that will be considered asgiving rise to a Priority Payment are the MT103+ messages or a future XML basedequivalent. Details of the MT103+ message type can be found in the formattingrules field by field as described in the latest SWIFT Standards Release Guide.Future XML based message details have to be described.

Operations and Technical Committee (OTC)

In order to specify that a payment is being sent under the scheme conditions ofan EBA Priority Payment the MT103+ message will be tagged as follows:

Field 23B to contain the code SPRI

SWIFT validation on usage of this field is the following:

If field 23B contains the code SPRI, field 23E may contain only the codes SDVA(same day value) or INTC (intra-company payment). Error code(s): E01.

If field 23B contains the code SPRI, field 56Amust not be present. Error code(s):E16. (i.e. no intermediary bank allowed, only originator, beneficiary and accountservicing institution).

The XML equivalent is still to be developed.

All times quoted in this document are expressed as Central European Time (CET).

The relationship between the bank and its customers both at an originator and abeneficiary level remains part of the competitive environment, specifically in rela-tion to the pricing of the service, general timeframes for receiving and deliveringinstructions and the method of communication between customer and bank. Thereare, however, minimum conditions in relation to the scheme timeframe conditionsto be met by participants vis-à-vis their customers and the other bank participants.

The Priority Payment operates on a four hours maximum processing timeframe.The four hours timeframe starts with acceptance of the payment instruction by theoriginator bank and ends when funds have been made available to the beneficiarycustomer.

3. The Priority Payments scheme

3.1 // Message types

3.2 // Flagging

3.3 // Timeframes


Originator banks are required to process instructions meeting the relevant condi-tions as a Priority Payment provided they meet the defined bank-to-bank process-ing standards and are accepted within the timeframe agreed in the individualservice level agreement. The payment instruction will be sent to the PaymentChannel within 1 ½ hours of acceptance and in time for same-day processing i.e.before 13h30 CET (time is based on acknowledgement of acceptance of the pay-ment instructions from the Payment Channel).

The cut-off time for processing the payment in the utilized Payment Channel is14h30 CET, allowing the originator bank sufficient time to take necessary actionto ensure the payment is processed.

Originator banks may advise originating customers as per the bilateral serviceagreement between the bank and the customer concerned.

Beneficiary banks are required to make the funds available to the beneficiarywithin 1 ½ hours and with same-day availability of funds provided the payment isreceived no later than 14h30 CET.

Beneficiary banks shall advise the beneficiary of the incoming funds as part of thebilateral service agreement between the bank and the customer concerned.

3.4.1 Validation at the level of the originator bank

The originator bank agrees with its customers the conditions that need to be ful-filled for a Priority Payment to be processed.

In view of the cut-off time conditions for processing the payment, it is recom-mended that non-STP payments are not accepted as Priority Payments.

The originator bank performs a check about the participation of a beneficiary bankto the Priority Payments scheme.

In case of absence of mandatory information, or of mutually agreed supplementaryinformation, the originator bank reserves the right to validate the instructions withthe originator and to apply any charging conditions as have been so establishedwith the customer for doing so.

The originator bank is required to check that the structure of the IBAN quoted forthe beneficiary is correct.

Only on receipt of full and complete instructions for a Priority Payment do the con-ditions of the scheme apply, specifically with regards to timeframes for completionof the payment and making the funds available to the beneficiary.

3.4 // Validation andrejections


3.4.2 Validation at the level of the beneficiary bank

The beneficiary bank is required to validate that the mandatory elements of themessage are available and correct in order to guarantee that the timing conditionscan be respected. The beneficiary bank is also .required to have sufficient controlsin place to ensure it can return a Priority Payment instruction that has missing orincorrect information on the same business day if the payment is received before14.30 CET. Any additional validation is at the discretion of the beneficiary bank andfalls under the bilateral service agreement with its customer.

3.5.1 Returns at the level of the beneficiary bank

When returning a Priority Payment, the beneficiary bank will include a referenceto the original Priority Payment in line with the message standards (e.g. the Re-lated Reference field from the returned Priority Payment).

Recommended best practice is to include ‘SPRI’ in the narrative of the return mes-sage.

The originator bank advises the originator that the Priority Payment has been re-turned as per the bilateral service level agreement.

3.5.2 Repair at the level of the originator bank

In the case of erroneous instructions being received from the originator it is up tothe originator bank to decide if erroneous instructions can or will be repaired. Theservice level agreement between the two parties will define the terms and condi-tions.

3.5.3 Repair at the level of the beneficiary bank

In the case of erroneous instructions being received from the originator bank it isup to the beneficiary bank to decide if erroneous instructions can or will be re-paired.

3.5.4 Reject at the level of the payment system

If a Priority Payment has been rejected by the payment system the originator bankadvises the originator as per the bilateral service level agreement and may explainthe reason for rejection.

3.5 // Repairs, Rejects,Returns


The Priority Payment scheme availability is based on TARGET operating days.

The only time the scheme is not available is when TARGET is closed. In the eventthat the originator bank observes an official bank holiday, the scheme conditionswill apply as for a payment instruction received at 07h00 CET on the next businessday of the originator bank.

In the event that the beneficiary bank observes an official bank holiday the schemeconditions will apply as for a payment instruction issued by the originator bank at07h00 CET on the next business day of the beneficiary bank.

No penalty charge or interest claim can be addressed to the originator bank in thecase of official bank holidays, provided the Priority Payment conditions are met onthe next business day.

The time commitments inherent in the scheme may not be met in the case wherethe application of the payment is delayed to meet regulatory reporting obligationse.g. in relation to money laundering or balance of payments reporting. It is the re-sponsibility of the beneficiary to ensure the information is available to allow thebeneficiary bank to apply the funds within the stipulated timeframe conditions.

No penalty charge or interest claim can be addressed to the originator bank orthe beneficiary bank if a payment is delayed and the delay is caused by regulatoryreporting obligations.

Compliance with the conditions described under responsibilities may be hinderedby causes which are beyond the control of a participant in the scheme (‘ForceMajeure’, including unforeseen technical problems). Participants in the schemeshould be in a position to demonstrate appropriate back-up facilities have been es-tablished to meet with technical difficulties that can be anticipated and do not comeunder the category of highly exceptional circumstances. These should be in linewith the back-up arrangements currently in place for the time-critical settlement ofobligations in systemically important payment systems.

No penalty charge or interest claim can be addressed to the originator bank orthe beneficiary bank if a payment is delayed and the delay is caused by ‘Force Ma-jeure’.

3.6 // Operating days

3.7 // Delays caused byregulatory reportingobligations

3.8 // Back-up arrangements


There will be no interbank fee for processing a Priority Payment. Any conditionsin this respect may evolve taking into account the regulatory environment andpractices as may be adopted by the banking industry.

Pricing of the service remains strictly between the participating bank and its cus-tomer both from an originator and beneficiary perspective. Charging for Repairs,Rejects or Returns are a matter of participant’s exception handling procedures,their terms and conditions and market practice. The scheme offers opportunitiesfor banks to market new/specific services to their customer base and may requirebanks to address how information is routed to customers in time to meet withevolving scheme conditions relating to advising the customers.

Participation in the scheme is open, on a voluntary basis, to a credit institutionduly licensed to conduct banking business and located in EEA.

Participants have to be direct or indirect participants in an RTGS system. Anyother payment channel capable of processing within applicable time constraintscan be used. The timeframe commitments of the scheme preclude paymentswhere separate reconciliation of incoming funds is required, such as cover pay-ments.

A participant can be directly connected to a payment infrastructure or route andreceive payments through an intermediary financial institution. Service level agree-ments with the intermediary financial institution must allow the participant to meetthe scheme processing commitments.A bank wishing to participate in the scheme shall register itself on the centralrepository maintained by the EBA for the purposes of the scheme.

The EBA will update and maintain the scheme conditions in accordance with thebusiness practices as shall be applied among the scheme participants, and estab-lish a central repository for the registration of participation in the scheme.

The purpose of the central repository is to enable originator banks to advise theircustomers about the participation of the beneficiary bank in the Priority Paymentsscheme. The optional updates or additional information may become mandatoryas uptake of the scheme progresses.

Registration in the database will be completed directly by the Participating Banksthrough an on-line service, as will consultation of the information containedtherein. Participating Banks are required to ensure information registered in thedatabase is correct and complete, and it shall be the responsibility of each Partic-ipating Bank to maintain the information up–to-date.

3.9 // Charging principles

3.10 // Participationconditionsand registration


The below table describes the processing cycle of a Priority Payment in relationto the cut-off time conditions of the scheme. Each step in the processing cyclecan, of course be undertaken as of completion of the previous step i.e. the origi-nator bank can send the payment instruction to the payment system on receipt ofthe payment instruction from the originator, as soon as it is able to do so and doesnot need to wait until 13h30 CET.

4. Schematic presentation of cut-off times for Priority Payment processing


Banking Business Day A day which is not an official bank holiday in eitherthe country of the originator bank and/or the coun-try of the beneficiary bank.

Beneficiary Customer identified in the Priority Payment In-struction who receives the Funds by means of acredit to its account –

Beneficiary Bank Participant that receives the Priority Payment In-struction and credits the account of the Benefici-ary, according to the information provided in theinstruction and in accordance with the provisionsof the Scheme

Force Majeure Abnormal and unforeseeable circumstances be-yond the control of the person affected by forcemajeure, the consequences of which would havebeen unavoidable despite all efforts to the con-trary.

Message Type Specification of MT103+ SWIFT message (seecurrent SWIFT Standards Release Guide) theonly message type that will be recognised for pro-cessing as a Priority Payment as at the time oflaunching the scheme

Official Bank Holiday A national or regional holiday as characterized bythe fact that on such a day within the country or re-gion banks are usually closed and other businessin the same area would usually also not operate.

Originator Customer who initiates the Priority Payment byproviding the Originator Bank with an instruction

Originator Bank Participant that receives the Priority Payment In-struction from the Originator and acts on the pay-ment instruction by sending the payment in favourof the Beneficiary’s account with the Beneficiarybank according to the information provided in theinstruction and in accordance with the provisionsof the Scheme

Payment Channel Payment system capable of processing a PriorityPayment under the conditions of the scheme

Priority Payment An urgent and individual credit transfer which isexecuted such that, both for the originator and thebeneficiary, a designated transfer of funds, gov-erned by specific conditions and time limitationsas defined in this Scheme, will take place on aparticular day, provided the payment executiontakes place between banks participating in thescheme within four hours.

5. Definitions


Rejects Priority Payments not accepted for normal execu-tion before interbank Settlement for technical orvalidation reasons; e.g. in case of a problem withthe message format, date, senders security cre-dentials, duplication, BICs, etc.

Returns Priority Payments diverted from normal executionafter interbank Settlement, and sent by the Bene-ficiary Bank to the Originator Bank for a PriorityPayment that cannot be executed for valid reasonssuch as wrong account number or account closedwith the consequence that the Beneficiary accountcannot be credited on the basis of the informationcontained in the original credit transfer message.

Reversals (outside schemeconditions)

Priority Payments reversed by the beneficiarybank, when the beneficiary has been credited andinterbank settlement completed and when the orig-inator bank realises a mistake has been made.

Scheme Priority Payments Scheme.

STP The principle of processing payment transactionsentirely electronically under avoidance of the needfor re-keying or manual intervention, except forreasons of policy and within legal and regulatoryrestrictions.

Time of Acceptance It is the start of the time cycle for execution. It is themoment of fulfilment of all conditions required bythe Originator Bank as to the execution of a PriorityPayment, including, but not limited to, regulatoryobligations, to cut-off times defined by the origina-tor bank and to the availability of adequate finan-cial cover and of the information required toexecute the instruction.


Timing Scheme

Euro Banking Association (EBA)4, rue de GallieraF - 75116 ParisTVA (VAT) n°: FR 12337899694

For any additional information, please contact the following persons:

Name Rik Wanders Audrey PruneauJob Senior Consultant Manager

New Business Initiatives New Business InitiativesUnit [email protected] [email protected]

Tel. +33 (0) 1 53 670 732 Tel. +33 (0) 1 53 670 738

Contact details

mailto:[email protected]

mailto:[email protected]

eba clearing 01 · 2007-06-11 · 6...

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