Learn what MT103 is, how it works, its benefits and drawbacks, and how to use it effectively for your cross-border payments. Compare it with other SWIFT messages and payment methods.

The only Real Alternative moving forward is using the new ISO 20022 messages defined by Swift CBPR +. This is much better from a data perspective as they hold a better data set often referred to as "Rich Data" which will Enhanced reconciliation capabilities as well as exception management and also makes sense if you wish to engage in the upcoming "Pre-validation cycles" which will server to further reduce and pre-empt potential exceptions.

How can you use MT103 for international payments?

If you are involved in international trade or finance, you may have encountered the term MT103. But what is it and how can you use it for your cross-border payments? In this article, we will explain the basics of MT103, its benefits and drawbacks, and some tips to make the most of it.

Key takeaways from this article

Verify essential identifiers:

Always double-check SWIFT codes and IBANs for both sender and receiver. This ensures payment accuracy and prevents costly errors or delays.### *Confirm payment status:Follow up with the recipient bank to verify receipt and status. This practice helps avoid misunderstandings and ensures smooth transaction completion.

This summary is powered by AI and these experts

1 What is MT103?

MT103 is a type of SWIFT message that is used to instruct a bank to make a single payment to another bank or beneficiary. SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, is a global network that facilitates secure and standardized communication between financial institutions. MT103 is one of the most common and widely used SWIFT messages, as it covers a variety of payment scenarios, such as invoices, salaries, dividends, and fees.

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Hamish Anderson

CEO at Money Mover
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An MT103 is a standardised SWIFT message used national and cross-border wire transfers. MT103s are globally accepted as proofs of payment and include all payment details such as date, amount, currency, sender and recipient. They also include a Unique End-to-end Transaction Reference (UETR) which enables transactions to be identified and tracked. All banks and financial institutions which make payments via SWIFT will have an MT103 for every payment, but they may not be provided to customers unless specifically requested.

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Roland Brandli

Strategic Product Manager at SmartStream Technologies with expertise in Banking Operations and Retail Management.
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It is considered as a legally Bindung message along participants of the Swift Network. It requires pre-agreement(key exchange) with the counterparty in order to be sent

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2 What are the benefits of MT103?

Using MT103 for your international payments has several advantages. First, it is fast and reliable, as it can be transmitted within minutes and confirmed by the recipient bank. Second, it is transparent and traceable, as it contains detailed information about the sender, the receiver, the amount, the currency, and the purpose of the payment. Third, it is compliant and secure, as it follows the SWIFT standards and protocols, and is encrypted and authenticated by the SWIFT network.

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Bertrand GODIN

Co-founder & COO at Fipto
(edited)
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I am not sure I would agree with all these benefits. The main benefit to me is to be resilient and globally accepted by most financial institutions. However on some "benefits" I disagree. Saying that a few minutes is fast is not enough in our current world where we need instant payment. Few minutes is too long in 2023. Many financial institutions would not use API to send these messages making it too long for the ordering customer or beneficiary compared to alternatives in payments (instant payment schemes or digital assets). On traceability, despite the improvements of SWIFT in payments we can still often lose traceability on some payments and it is always hard to locate funds between intermediary banks.

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Roland Brandli

Strategic Product Manager at SmartStream Technologies with expertise in Banking Operations and Retail Management.
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It requires an extensive agreed Network adding complications and can only be sent individually if a bank already holds a Nostro account with the recipient, otherwise it needs an intermediary which can complicate things and requires that staff are Trainer accordingly

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3 What are the drawbacks of MT103?

However, MT103 also has some limitations and challenges that you should be aware of. First, it is costly, as it involves fees from both the sending and the receiving banks, as well as possible intermediary banks. These fees can vary depending on the currency, the amount, the country, and the bank. Second, it is subject to regulations and sanctions, as it may require additional documentation and verification to comply with anti-money laundering and anti-terrorism laws. Third, it is not flexible, as it does not allow for modifications or cancellations once it is sent.

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Bertrand GODIN

Co-founder & COO at Fipto
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We can also add: - For most payments it needs to be a completed by a MT202 for effective transfer of funds (which sometimes create issues of payment without the cover) - Lack of predictability (when will the payment be received by the beneficiary)

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Roland Brandli

Strategic Product Manager at SmartStream Technologies with expertise in Banking Operations and Retail Management.
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Understanding how to create the message Syntax requires considerable know how and takes considerable Set up in conjunction with the systems that deliver the data. Additionally it does not hold enough information hence the introduction of Rich data with the ISO 20022 formats

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4 How can you use MT103 effectively?

To use MT103 for your international payments efficiently and smoothly, here are some tips to follow. First, check the SWIFT codes and IBANs of both the sender and the receiver banks, as these are essential identifiers that ensure the accuracy and validity of the payment. Second, provide clear and complete information about the payment, such as the invoice number, the contract reference, the payment date, and the payment details. Third, confirm the receipt and the status of the payment with the recipient bank or beneficiary, as this can help you avoid delays and disputes.

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Bertrand GODIN

Co-founder & COO at Fipto
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Also it is important to specify well intermediary banks in the different fields of the message. Too often, the route of intermediary banks used is not the best one which can lead to payment not reaching beneficiary bank or additional delay and fees on the payment.

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Roland Brandli

Strategic Product Manager at SmartStream Technologies with expertise in Banking Operations and Retail Management.
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Ensuring that you use the UETR reference can help hugely in tracking and identifying the payment in case of exceptions, this also works well if you have signed up for the SWIFT Gpi initiative. Ensuring that all the references are filled as described in the rule book also enables better processing and faster Resolution in case of exceptions

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5 What are the alternatives to MT103?

MT103 is not the only option for your international payments. Depending on your needs and preferences, you may consider other SWIFT messages or other payment methods. For example, if you want to make multiple payments in a batch, you can use MT101, which is a request for transfer. If you want to make a direct debit from a customer's account, you can use MT104, which is a direct debit and request for debit. If you want to use a cheaper and faster payment method, you can use online platforms or fintech solutions that use blockchain or other technologies.

MT103 is a powerful and versatile tool for your international payments, but it also has some drawbacks and challenges. By understanding its features, benefits, and limitations, you can use it effectively and efficiently for your cross-border transactions. You can also explore other SWIFT messages or other payment methods that may suit your needs better.

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Roland Brandli

Strategic Product Manager at SmartStream Technologies with expertise in Banking Operations and Retail Management.
(edited)
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The only Real Alternative moving forward is using the new ISO 20022 messages defined by Swift CBPR +. This is much better from a data perspective as they hold a better data set often referred to as "Rich Data" which will Enhanced reconciliation capabilities as well as exception management and also makes sense if you wish to engage in the upcoming "Pre-validation cycles" which will server to further reduce and pre-empt potential exceptions.

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Bertrand GODIN

Co-founder & COO at Fipto
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MT103 is a message mainly used by financial institutions while MT101 is mainly used by corporates so they are not really alternatives in my opinion. There are also alternatives which not using SWIFT messages: - API of your partner financial institution - Using local payment schemes (with pacs messages for instance) - Using digital assets It can allow faster and cheaper payment, but also reduce the number of alternatives and increase predictability.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you use MT103 for international payments?

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1 What is MT103?

2 What are the benefits of MT103?

3 What are the drawbacks of MT103?

4 How can you use MT103 effectively?

5 What are the alternatives to MT103?

6 Here’s what else to consider

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