Pacs.004 and Pacs.002 MX Messages: A Deep Dive into Payment Return and Status Reporting

What are the uses of the Payment Return message (Pacs.004) and the FI to FI Payment Status Report (Pacs.002) messages? What is the difference between Reject and Return of payment? Let's understand with a bird's eye view of the structures of the Payment Return message (Pacs.004) and the FI to FI Payment Status Report (Pacs.002) messages.

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Reject and Return of Payments

Suppose a Corporate A is sending payment to Corporate B through the agents C, D and E, F.

The payment has followed its due course and reached Agent F. Now Agent F for some reason needs to reject this payment. For example, the creditor has died or there is some regulatory reason because of which the payment cannot be made. In such a case it will use the Pacs.002 message and use the status code of RJCT, which stands for 'Reject'. Remember that in this case, Agent F did not do any settlement of the payment in its books, before rejecting the payment.

But when the payment is going back, Agent E had already settled the payment in its books earlier. Now while returning the payment, it will send the Pacs.004 message. Likewise, the rest of the agents, who also settled their accounts earlier, will return the payment using the Pacs.004.

So, reject is when a payment is sent back before it's settled in the accounts. For that the pacs.002 status message is used.

Return is used when a payment is sent back after it was already settled in the account, and for that the pacs.004 payment return message is used.

Main Points - The Structure of Pacs.004

Return is when a payment is sent back after it was already settled in the account, and for that the pacs.004 payment return message is used.
It has two blocks - Group Header and Transaction Information
In CBPR+ and the HVPS+ each message will carry details of a single transaction only
The Transaction Information block contains information regarding the original transaction to which the return message refers.

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Main Points - The Structure of Pacs.002

Reject is when a payment is sent back before it's settled in the accounts. For that the pacs.002 status message is used.
Can be used to notify positive outcomes as well as a rejection of a FI to FI payment
Two blocks - Group Header and Transaction Information and Status
Transaction Information and Status

Transaction Status - External code set giving the status of the payment
For rejecting - code is RJCT - mandatory to send a pacs.002 message in the case a payment message is rejected
In case the status is RJCT then, the Status Reason Information block is mandatory
For sending positive outcomes bilateral agreement needed

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