Understanding Charges in ISO 20022 Payments – Part 1

When it comes to international payments or Cross Border transaction, charges play a significant role in determining who bears the cost of a transaction.

In the world of ISO 20022, specifically CBPR+ these charges are specified using codes that indicate the party responsible for paying the fees.

Let’s explore all the possible values for this.

Possible Values for Charges in CBPR+:-

1. CRED – The Creditor (recipient) bears all charges.

2. DEBT – The Debtor (sender) bears all charges.

3. SHAR – Charges are Shared between the sender and the recipient.

Real Life Example

Lets take an example of Amit in India (HDFC Bank) wants to send $1,000 to Sophia in Germany (Deutsche Bank). Here’s how the charges could be applied based on the selected charge type:

• CRED (Creditor): Amit sends $1,000, and Sophia receives the ($1,000- charges charged by Sophia's Bank).

• DEBT (Debtor): Amit is responsible for all charges. He pays HDFC Bank’s transfer fees and intermediary fees upfront. If Amit not pay, then the amount automatically deduct by bank from the instructed amount and Sophia receives the remaining amount.

• SHAR (Shared): Both parties share the cost. Amit pays the fees for HDFC Bank and intermediary banks, while Sophia pays any charges applied by Deutsche Bank.

Example in a Pacs.008 Message:

Here’s how the charge type appears in an ISO 20022 Pacs.008 message.

<ChrgsInf>
  <ChrgsAmt Ccy="USD">15.00</ChrgsAmt>
  <ChrgBr>SHAR</ChrgBr>
</ChrgsInf>
        

• ChrgsAmt: Specifies the charge amount ($15 in this case).
• ChrgBr: Indicates the charge bearer (SHAR = Shared).

Note:-

CLRG (Clearing): This code can also be used in RTGS messages of pacs for charges , depending on the clearing agreements between countries. It signifies that charges align with the settlement mechanism's specific clearing rules.