Reversals: pain.007, pacs.007 and Reason Codes AM05, MS02, MS03

A reversal is a creditor initiated instruction to undo a collection that has already been settled, and it is used when the creditor discovers its own error. Stadtwerke Linden might discover that it collected EUR 89.99 twice from Jonas Weber in November, once by file and once by a manual correction, and it must return the duplicate. The creditor sends a pain.007.001.09 Customer Payment Reversal to its bank, Harbour Bank Frankfurt, naming the original collection, the mandate reference SWL-JW-2026-0417, and the reason for the reversal. The pain.007 is the customer to bank message that starts the reversal, and it mirrors the pain.008 that started the collection. Harbour Bank Frankfurt converts the pain.007 into a pacs.007.001.09 FI to FI Payment Reversal for the interbank leg, and sends it through clearing to Meridian Bank Munich. The pacs.007 carries the original collection details, the reversal amount of EUR 89.99, and the reason code that explains why the money is coming back. Meridian Bank Munich receives the pacs.007, checks that the original collection exists and that the reversal is allowed under the scheme time limits, and credits EUR 89.99 back to the Jonas Weber account. The reversal moves money in the opposite direction to the original collection, and both banks record it against the original mandate reference. Reason code AM05 means a duplicate collection, and it is the code Stadtwerke Linden uses when it reverses the second EUR 89.99 collection. AM05 tells the debtor bank that the same collection was sent twice, so the debtor can see that the reversal is a correction, not a refund claim. The code matters for reporting, because a creditor with many AM05 reversals has a duplicate generation problem in its billing system, and the operations team should investigate the source rather than reversing each duplicate by hand. A business analyst should track AM05 volumes as a quality signal for the creditor collection process. Reason code MS02 means the mandate is missing or invalid, and it is used when the debtor bank cannot find a mandate that covers the collection. If Jonas Weber had cancelled his mandate in October but Stadtwerke Linden still sent the November collection, Meridian Bank Munich would reject or return the collection with reason MS02. Reason code MS03 means the collection is not allowed for another reason, for example because the debtor account is blocked for direct debits or because the debtor has instructed the bank to refuse collections from that creditor. MS03 is a broad code, and the bank should record the underlying reason in its own systems so the customer service team can explain it to the debtor. Worked example with numbers: Stadtwerke Linden discovers it collected EUR 89.99 twice from Jonas Weber in November, once by mistake and once correctly, and it must reverse the duplicate. The utility sends a pain.007.001.02 reversal instruction to Harbour Bank Frankfurt, which converts it into a pacs.007.001.09 for the interbank leg and sends it through clearing to Meridian Bank Munich. The pacs.007 carries the original collection details, the reversal amount of EUR 89.99, and reason code AM05, duplicate collection, so that Meridian Bank can credit the Jonas Weber account and show the customer that the reversal is a correction, not a new charge. Failure and recovery: a reversal fails when the reason code is wrong, because the debtor bank cannot tell why the money is coming back. If Stadtwerke Linden reverses a collection with reason code MS02, mandate missing or invalid, when the real reason is a duplicate, the debtor bank may investigate the mandate instead of crediting the customer, and the customer waits longer for the refund. If the reversal is sent after the refund window has closed, the debtor bank may refuse it, and the creditor must settle directly with the debtor. The recovery is a corrected reversal with the right reason code, but the customer has already waited, and the utility must explain the delay. For a business analyst, product owner or subject matter expert, the reversal requirement must state the messages, pain.007 from the creditor and pacs.007 between banks, and must state the reason codes, AM05 for a duplicate, MS02 for a missing or invalid mandate, and MS03 for a reason not specified. The requirement must also state that a reversal is creditor initiated, while a refund is debtor initiated, because confusing the two changes who pays and who is credited. The test pack must include a reversal for a duplicate, a reversal for a missing mandate, and a reversal with the wrong reason code, because each case exercises a different part of the rule. Source: EPC SDD Core Rulebook 2025; last reviewed 7 November 2026.