How a cross-border payment travels, bank by bank

In this video

1. 0:00How a cross-border payment travels
2. 0:05Why payments need correspondents
3. 0:16Nostro and vostro accounts
4. 0:26Serial payments: bank by bank
5. 0:39Cover payments: two routes
6. 0:52The UETR and tracking
7. 1:02Who pays the charges
8. 1:11What must travel with a payment
9. 1:23Look up a bank in the chain

Transcript

The video has no voice-over. This is the text it shows, chapter by chapter.

0:00 · How a cross-border payment travels

Correspondents, nostro and vostro, pacs messages. How a cross-border payment travels: from the payer’s bank to the payee’s bank, through the correspondents.

0:05 · Why payments need correspondents

No account between the two banks. Bank A, the payer’s bank in Brazil, and Bank D, the payee’s bank in Germany, hold no account with each other: across borders, the payer’s bank and the payee’s bank rarely hold accounts with each other. Bank B and Bank C, in the United States, are the dollar correspondents of Bank A and Bank D. A correspondent holds accounts for other banks and pays for them. A dollar payment from Brazil to Germany is usually settled in the United States.

0:16 · Nostro and vostro accounts

One account, seen from each side. The respondent, Bank A, holds an account at its correspondent, Bank B, usually in the correspondent’s currency. Nostro, “our account with you”, is Bank A’s view of it; vostro, “your account with us”, is Bank B’s view of the same account. When Bank B pays out of the account, it debits the vostro, and Bank A records a lower balance on its nostro.

0:26 · Serial payments: bank by bank

A serial payment, bank by bank: a pacs.008 customer payment goes from Bank A, the payer’s bank, to Bank B, Bank A’s correspondent, then to Bank C, Bank D’s correspondent, and to Bank D, the payee’s bank, settled at each step. The instruction and the funds travel together. Each bank settles with the previous one, then sends the customer payment on. Every bank sees the payer and the payee, and can screen the payment. Each bank that takes a fee can deduct it on the way.

0:39 · Cover payments: two routes

A cover payment: two routes. The instruction, a pacs.008, is sent directly from Bank A to Bank D. The funds, a pacs.009 COV, go through the correspondents: from Bank A to Bank B, Bank A’s correspondent, then to Bank C, Bank D’s correspondent, and to Bank D, which matches the cover to the instruction. Bank A sends the customer payment straight to Bank D, and the funds separately, through the correspondents. Bank D credits the payee once the cover arrives. The cover copies the payer and payee details, so the correspondents can screen it.

0:52 · The UETR and tracking

One reference, end to end: 9dbf6d2d-3db5-4e70-a516-6068da42d8a3. A UETR is a version 4 UUID: 32 hexadecimal characters in five groups. The unique end-to-end transaction reference: the first bank sets it, and every bank after it passes it on unchanged. Banks that are members of Swift GPI report each step against the UETR, up to the credit to the payee.

1:02 · Who pays the charges

Three codes for the charges. The payer’s bank states in the customer payment who bears them. DEBT (MT: OUR): the payer pays all charges; the payee receives the full amount. SHAR (MT: SHA): each side pays its own bank’s charges. CRED (MT: BEN): the payee pays all charges, deducted from the amount.

1:11 · What must travel with a payment

Payer and payee details travel with it. FATF Recommendation 16: information on the payer and the payee accompanies a wire transfer through the whole chain, so every bank can screen it. Revised in June 2025 as “Payment transparency”. The changes come into effect by the end of 2030. In law: in the EU, Regulation (EU) 2023/1113, applicable since 30 December 2024; in the US, 31 CFR 1010.410, for USD 3,000 or more.

1:23 · Look up a bank in the chain

Look up a bank in the chain: its BIC, its LEI, its national bank codes, how it is written as an agent in a payment message, and whether it is on the Swift GPI member list, at elucidate.co/directory. The full guide is at elucidate.co/guides/how-cross-border-payments-work.

Sources

• How a cross-border payment travels. Elucidate guide, reviewed 2 November 2026: the text this video follows.
• Correspondent banking, July 2016. Committee on Payments and Market Infrastructures (CPMI).
• Standards MT Release 2018: mandatory changes in category 1 and category 2, on the UETR. Swift.
• FATF updates Standards on Recommendation 16 on Payment Transparency, June 2025. Financial Action Task Force (FATF).
• Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain crypto-assets. EUR-Lex.
• 31 CFR 1010.410, records to be made and retained by financial institutions. Electronic Code of Federal Regulations.