Payments Training Hub
Read the three cases carefully PAYMENT OPERATIONS STARTED LIVE 01 Read the three cases carefully - write down your answer for each one before ACTIVE 02 RTGS Directory codes 05 - Use the RTGS Directory codes 05 QUEUED 03 Payment to an addressable BIC - Case two, payment to an addressable BIC, QUEUED 04 Lyon BIC rejection - payment that names the Lyon BIC QUEUED 05 Madrid branch later - If the Madrid branch later sends a payment QUEUED 06 Answer - If your answer for any case names QUEUED Read the three cases carefully, and write down your answer for each one before you check it against the text that follows. Step 1 of 6 Read the three cases carefully STARTED Read the three cases carefully write down your answer for each one before ACTIVE RTGS Directory codes 05 Use the RTGS Directory codes 05 QUEUED Payment to an addressable BIC Case two, payment to an addressable BIC, QUEUED Lyon BIC rejection payment that names the Lyon BIC QUEUED Madrid branch later If the Madrid branch later sends a payment QUEUED Answer If your answer for any case names QUEUED Read the three cases carefully, and write down your answer for each one before you check it against the text that follows.
RTGS Directory codes 05 PAYMENT OPERATIONS IN PROGRESS LIVE 01 Read the three cases carefully - write down your answer for each one before DONE 02 RTGS Directory codes 05 - Use the RTGS Directory codes 05 ACTIVE 03 Payment to an addressable BIC - Case two, payment to an addressable BIC, QUEUED 04 Lyon BIC rejection - payment that names the Lyon BIC QUEUED 05 Madrid branch later - If the Madrid branch later sends a payment QUEUED 06 Answer - If your answer for any case names QUEUED Use the RTGS Directory codes 05, 06, 07 and 08 as you decide each answer. Step 2 of 6 RTGS Directory codes 05 IN PROGRESS Read the three cases carefully write down your answer for each one before DONE RTGS Directory codes 05 Use the RTGS Directory codes 05 ACTIVE Payment to an addressable BIC Case two, payment to an addressable BIC, QUEUED Lyon BIC rejection payment that names the Lyon BIC QUEUED Madrid branch later If the Madrid branch later sends a payment QUEUED Answer If your answer for any case names QUEUED Use the RTGS Directory codes 05, 06, 07 and 08 as you decide each answer.
Payment to an addressable BIC PAYMENT OPERATIONS IN PROGRESS LIVE 01 Read the three cases carefully - write down your answer for each one before DONE 02 RTGS Directory codes 05 - Use the RTGS Directory codes 05 DONE 03 Payment to an addressable BIC - Case two, payment to an addressable BIC, ACTIVE 04 Lyon BIC rejection - payment that names the Lyon BIC QUEUED 05 Madrid branch later - If the Madrid branch later sends a payment QUEUED 06 Answer - If your answer for any case names QUEUED Case two, payment to an addressable BIC, tests whether you remember that the addressable BIC holds no account. Step 3 of 6 Payment to an addressable BIC IN PROGRESS Read the three cases carefully write down your answer for each one before DONE RTGS Directory codes 05 Use the RTGS Directory codes 05 DONE Payment to an addressable BIC Case two, payment to an addressable BIC, ACTIVE Lyon BIC rejection payment that names the Lyon BIC QUEUED Madrid branch later If the Madrid branch later sends a payment QUEUED Answer If your answer for any case names QUEUED Case two, payment to an addressable BIC, tests whether you remember that the addressable BIC holds no account.
Lyon BIC rejection PAYMENT OPERATIONS IN PROGRESS LIVE 01 Read the three cases carefully - write down your answer for each one before DONE 02 RTGS Directory codes 05 - Use the RTGS Directory codes 05 DONE 03 Payment to an addressable BIC - Case two, payment to an addressable BIC, DONE 04 Lyon BIC rejection - payment that names the Lyon BIC ACTIVE 05 Madrid branch later - If the Madrid branch later sends a payment QUEUED 06 Answer - If your answer for any case names QUEUED A payment that names the Lyon BIC as instructed agent will be rejected. Step 4 of 6 Lyon BIC rejection IN PROGRESS Read the three cases carefully write down your answer for each one before DONE RTGS Directory codes 05 Use the RTGS Directory codes 05 DONE Payment to an addressable BIC Case two, payment to an addressable BIC, DONE Lyon BIC rejection payment that names the Lyon BIC ACTIVE Madrid branch later If the Madrid branch later sends a payment QUEUED Answer If your answer for any case names QUEUED A payment that names the Lyon BIC as instructed agent will be rejected.
Madrid branch later PAYMENT OPERATIONS IN PROGRESS LIVE 01 Read the three cases carefully - write down your answer for each one before DONE 02 RTGS Directory codes 05 - Use the RTGS Directory codes 05 DONE 03 Payment to an addressable BIC - Case two, payment to an addressable BIC, DONE 04 Lyon BIC rejection - payment that names the Lyon BIC DONE 05 Madrid branch later - If the Madrid branch later sends a payment ACTIVE 06 Answer - If your answer for any case names QUEUED If the Madrid branch later sends a payment itself, the BAH From will be COBAESMXXXX, while the instructing agent will still be COBADEFFXXX. Step 5 of 6 Madrid branch later IN PROGRESS Read the three cases carefully write down your answer for each one before DONE RTGS Directory codes 05 Use the RTGS Directory codes 05 DONE Payment to an addressable BIC Case two, payment to an addressable BIC, DONE Lyon BIC rejection payment that names the Lyon BIC DONE Madrid branch later If the Madrid branch later sends a payment ACTIVE Answer If your answer for any case names QUEUED If the Madrid branch later sends a payment itself, the BAH From will be COBAESMXXXX, while the instructing agent will still be COBADEFFXXX.
Answer for any case names PAYMENT OPERATIONS COMPLETE LIVE 01 Read the three cases carefully - write down your answer for each one before DONE 02 RTGS Directory codes 05 - Use the RTGS Directory codes 05 DONE 03 Payment to an addressable BIC - Case two, payment to an addressable BIC, DONE 04 Lyon BIC rejection - payment that names the Lyon BIC DONE 05 Madrid branch later - If the Madrid branch later sends a payment DONE 06 Answer - If your answer for any case names ACTIVE If your answer for any case names the receiving bank as BAH To, change it to the T2 service. Step 6 of 6 Answer for any case names COMPLETE Read the three cases carefully write down your answer for each one before DONE RTGS Directory codes 05 Use the RTGS Directory codes 05 DONE Payment to an addressable BIC Case two, payment to an addressable BIC, DONE Lyon BIC rejection payment that names the Lyon BIC DONE Madrid branch later If the Madrid branch later sends a payment DONE Answer If your answer for any case names ACTIVE If your answer for any case names the receiving bank as BAH To, change it to the T2 service.

Key points of this lesson, in order.

0:00 / 4:46 Step 1 of 6

Exercise: Address Three Payments in T2

Addressing Payments in T2, Lesson 7 of 7, Narration 4:46, D05 Domestic payment systems

Indirect participantDirect participantAddressable BIC

What you will learn

Your objective. By the end of this lesson, you will be able to explain exercise: address three payments in T2. Read the three cases carefully, and write down your answer for each one before you check it against the text that follows.

Why it matters. This matters because the rail decides how fast the money moves, what it costs, when it settles and what can go wrong. Choosing the wrong rail is a product and an operations failure.

Chapter objective: Learner explains addressing in T2, distinguishes Direct, Indirect, Multi-addressee and Addressable BIC participation, and describes how the BAH and the instructed agent differ in routing. Learner uses real BIC examples and payment amounts to show how addressing works in practice.

Key learning points

  • Read the three cases carefully
  • RTGS Directory codes 05
  • Payment to an addressable BIC
  • Lyon BIC rejection
  • Madrid branch later
  • Answer for any case names

Key terms

Indirect participant: A bank or institution that uses a payment system through a direct participant, without holding its own settlement account.

Direct participant: A bank or institution that holds an account in a payment system and sends and receives payments directly.

Addressable BIC: A BIC that is addressable in a payment system, meaning the system can route payments to the institution that holds it, either directly or through another participant.

Payment flow diagram showing Exercise: Address Three Payments in T2.

Practise this lesson

Exercise

Decide which settlement model fits the scenario in this lesson and explain why.

Use the settlement models, the liquidity trade-off and the finality rules in this lesson.

  1. What to do. Name the model, state when settlement becomes final, and explain what happens if the sending bank does not have enough liquidity.

Correct result. Real time gross settlement settles each payment individually in central bank money with immediate finality, but it needs liquidity for every payment. Deferred net settlement nets payments and settles the net position, which needs less liquidity but leaves settlement risk until the net settles.

Why. Settlement is where money actually moves. The model decides the risk, the liquidity need, and when the payment is truly final.

Check your understanding

Practice question

Which of the following best describes exercise: address three payments in T2?

Takeaway and next step

What to remember

Case two, payment to an addressable BIC, tests whether you remember that the addressable BIC holds no account.

Follow EUR 1 through every stage, from instruction to beneficiary credit, and note where it can stop.

Open the Payment Lifecycle Simulator →

Builds on "T2 with a CBPR+ Leg: Multi-Addressee in Practice".

Transcript and full text

Show transcript

Read the three cases carefully, and write down your answer for each one before you check it against the text that follows. Case one is a direct to direct payment of EUR 1 million from Deutsche Bank in Frankfurt, BIC DEUTDEFFXXX, to BNP Paribas in Paris, BIC BNPAFRPPXXX. Case two is a payment of EUR 75,000 from Deutsche Bank to a Lyon branch of BNP Paribas, whose branch BIC is listed in the directory as an addressable BIC holder, code 08, settled through the Paris head office, BIC BNPAFRPPXXX, which holds the direct participant account. Case three is a payment of EUR 300,000 to the Commerzbank Madrid branch, BIC COBAESMXXXX, a multi-addressee of Commerzbank Frankfurt, BIC COBADEFFXXX. Use the RTGS Directory codes 05, 06, 07 and 08 as you decide each answer. Case one, direct to direct, is the simplest payment in T2, and it is the pattern every other case is measured against. The BAH From is DEUTDEFFXXX, the BAH To is the T2 service, the instructing agent is DEUTDEFFXXX, and the instructed agent is BNPAFRPPXXX. The debtor agent is DEUTDEFFXXX and the creditor agent is BNPAFRPPXXX. The payment settles on the Deutsche Bank RTGS DCA, debited by EUR 1 million, and on the BNP Paribas RTGS DCA, credited by EUR 1 million. The header and the payment agree in the simplest way, because the sender holds the account and the receiver holds the account, with no branch or intermediary in between. Case two, payment to an addressable BIC, tests whether you remember that the addressable BIC holds no account. The Lyon branch BIC is the creditor agent in the pacs.008, because the branch holds the customer account, but the instructed agent is BNPAFRPPXXX, the Paris head office direct participant, code 05, which holds the RTGS DCA that T2 will credit. The BAH From is DEUTDEFFXXX, the BAH To is the T2 service, the instructing agent is DEUTDEFFXXX, and the instructed agent is BNPAFRPPXXX. The EUR 75,000 settles on the Paris head office RTGS DCA, and the head office then credits the Lyon branch in its own books. A payment that names the Lyon BIC as instructed agent will be rejected. Case three, payment to a multi-addressee branch, tests the mirror image of the last case. The Madrid branch, COBAESMXXXX, is the creditor agent, because the branch holds the customer relationship, but the instructed agent is COBADEFFXXX, the direct participant that holds the RTGS DCA. The BAH From is the sending bank BIC, the BAH To is the T2 service, the instructing agent is the sending bank, and the instructed agent is COBADEFFXXX. The EUR 300,000 settles on the Commerzbank Frankfurt RTGS DCA, and Frankfurt credits the Madrid branch internally. If the Madrid branch later sends a payment itself, the BAH From will be COBAESMXXXX, while the instructing agent will still be COBADEFFXXX. Check your three answers against two rules that catch most errors. First, the BAH To is always the T2 service, never the receiving bank, in all three cases. Second, the instructed agent is always the direct participant that holds the RTGS DCA, never an addressable BIC, never an indirect participant, and never a multi-addressee branch on its own. If your answer for case two or case three names the branch BIC as instructed agent, change it to the direct participant BIC and the payment will settle. If your answer for any case names the receiving bank as BAH To, change it to the T2 service. Those two corrections fix the large majority of addressing failures in T2 testing.

Read the three cases carefully, and write down your answer for each one before you check it against the text that follows. Case one is a direct to direct payment of EUR 1 million from Deutsche Bank in Frankfurt, BIC DEUTDEFFXXX, to BNP Paribas in Paris, BIC BNPAFRPPXXX. Case two is a payment of EUR 75,000 from Deutsche Bank to a Lyon branch of BNP Paribas, whose branch BIC is listed in the directory as an addressable BIC holder, code 08, settled through the Paris head office, BIC BNPAFRPPXXX, which holds the direct participant account. Case three is a payment of EUR 300,000 to the Commerzbank Madrid branch, BIC COBAESMXXXX, a multi-addressee of Commerzbank Frankfurt, BIC COBADEFFXXX. Use the RTGS Directory codes 05, 06, 07 and 08 as you decide each answer.

Case one, direct to direct, is the simplest payment in T2, and it is the pattern every other case is measured against. The BAH From is DEUTDEFFXXX, the BAH To is the T2 service, the instructing agent is DEUTDEFFXXX, and the instructed agent is BNPAFRPPXXX. The debtor agent is DEUTDEFFXXX and the creditor agent is BNPAFRPPXXX. The payment settles on the Deutsche Bank RTGS DCA, debited by EUR 1 million, and on the BNP Paribas RTGS DCA, credited by EUR 1 million. The header and the payment agree in the simplest way, because the sender holds the account and the receiver holds the account, with no branch or intermediary in between.

Case two, payment to an addressable BIC, tests whether you remember that the addressable BIC holds no account. The Lyon branch BIC is the creditor agent in the pacs.008, because the branch holds the customer account, but the instructed agent is BNPAFRPPXXX, the Paris head office direct participant, code 05, which holds the RTGS DCA that T2 will credit. The BAH From is DEUTDEFFXXX, the BAH To is the T2 service, the instructing agent is DEUTDEFFXXX, and the instructed agent is BNPAFRPPXXX. The EUR 75,000 settles on the Paris head office RTGS DCA, and the head office then credits the Lyon branch in its own books. A payment that names the Lyon BIC as instructed agent will be rejected.

Case three, payment to a multi-addressee branch, tests the mirror image of the last case. The Madrid branch, COBAESMXXXX, is the creditor agent, because the branch holds the customer relationship, but the instructed agent is COBADEFFXXX, the direct participant that holds the RTGS DCA. The BAH From is the sending bank BIC, the BAH To is the T2 service, the instructing agent is the sending bank, and the instructed agent is COBADEFFXXX. The EUR 300,000 settles on the Commerzbank Frankfurt RTGS DCA, and Frankfurt credits the Madrid branch internally. If the Madrid branch later sends a payment itself, the BAH From will be COBAESMXXXX, while the instructing agent will still be COBADEFFXXX.

Check your three answers against two rules that catch most errors. First, the BAH To is always the T2 service, never the receiving bank, in all three cases. Second, the instructed agent is always the direct participant that holds the RTGS DCA, never an addressable BIC, never an indirect participant, and never a multi-addressee branch on its own. If your answer for case two or case three names the branch BIC as instructed agent, change it to the direct participant BIC and the payment will settle. If your answer for any case names the receiving bank as BAH To, change it to the T2 service. Those two corrections fix the large majority of addressing failures in T2 testing.

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