Explore Razorpay’s Global Payment Solutions<\/a><\/p>\nThe MT400 Workflow in International Trade<\/b><\/h2>\n
An MT400 does not move money by itself. It sits inside a wider documentary collection process where documents move physically, while payment information moves digitally over SWIFT. Understanding this sequence helps you know exactly why you are waiting\u2014and who is holding the funds at each stage.<\/span><\/p>\nStep 1: Collection and Document Presentation<\/b><\/h3>\n
The process starts with documents, not money. You ship the goods and submit the required documents\u2014invoice, bill of lading, packing list\u2014to your bank. The collecting bank then presents these documents to the buyer.<\/span><\/p>\nThis usually happens under:<\/b><\/p>\n\n- Documents against Payment, or<\/span><\/li>\n
- Cash Against Documents terms<\/span><\/li>\n<\/ul>\n
The buyer can access the documents only after agreeing to pay.<\/span><\/p>\nStep 2: Buyer Payment and MT400 Creation<\/b><\/h3>\n
Once the buyer pays, the collecting bank receives the funds into its account. At this stage, it:<\/span><\/p>\n\n- Applies agreed bank charges<\/span><\/li>\n
- Confirms receipt of payment<\/span><\/li>\n
- Sends an MT400 Advice of Payment to your remitting bank<\/span><\/li>\n<\/ul>\n
The MT400 signals that payment has been made to the collecting bank\u2014but not that you have been paid yet.<\/span><\/p>\nStep 3: Settlement via Correspondent Banks<\/b><\/h3>\n
While the MT400 travels as a message, the actual funds move separately through correspondent banks, typically using an MT202.<\/span><\/p>\nThis settlement leg is critical. The MT400 tells your bank:<\/span><\/p>\n\n- Which correspondent bank will send the funds<\/span><\/li>\n
- Where to watch for the incoming credit<\/span><\/li>\n<\/ul>\n
Only after this settlement completes does your bank credit your account. Until then, you are effectively waiting at the final checkpoint.<\/span><\/p>\nMT400 Vs. Other SWIFT Messages: What Is the Difference?<\/b><\/h2>\n
Exporters often receive more than one SWIFT-related update for the same transaction. This happens because trade payments rely on different messages for different jobs. Some messages inform, while others move money.<\/span><\/p>\nMT400 Vs. MT103<\/b><\/h3>\n
These two are often mistaken for each other.<\/span><\/p>\n\n- MT400 confirms that the buyer has paid the collecting bank.<\/span><\/li>\n
- MT103 is the actual payment instruction with beneficiary details.<\/span><\/li>\n
- MT103 works for general remittances like service exports or advance payments.<\/span><\/li>\n
- MT400 appears specifically in documentary collections, not regular wire transfers.<\/span><\/li>\n<\/ul>\n
MT400 Vs. MT202<\/b><\/h3>\n\n- MT202 is a bank-to-bank transfer used to move liquidity.<\/span><\/li>\n
- The MT400 announces that payment has happened.<\/span><\/li>\n
- The MT202 quietly settles the money between banks.<\/span><\/li>\n<\/ul>\n
Exporters rarely see the MT202, but your bank relies on it to credit your account. Think of the MT400 as the alert\u2014and the MT202 as the engine doing the real work.<\/span><\/p>\nComparison of Common SWIFT Messages<\/b><\/h3>\n\n\n\n| Message Type<\/b><\/td>\n | Purpose<\/b><\/td>\n | Funds Movement<\/b><\/td>\n | Sender\/Receiver<\/b><\/td>\n | Typical Use Case<\/b><\/td>\n<\/tr>\n\n| MT400<\/b><\/td>\n | Advice of Payment<\/span><\/td>\n | No<\/span><\/td>\n | Collecting Bank \u2192 Remitting Bank<\/span><\/td>\n | Documentary collections (CAD, D\/P)<\/span><\/td>\n<\/tr>\n\n| MT103<\/b><\/td>\n | Customer credit transfer<\/span><\/td>\n | Yes<\/span><\/td>\n | Buyer\u2019s Bank \u2192 Exporter\u2019s Bank<\/span><\/td>\n | Direct wire payments<\/span><\/td>\n<\/tr>\n\n| MT202<\/b><\/td>\n | Bank-to-bank settlement<\/span><\/td>\n | Yes<\/span><\/td>\n | Bank \u2192 Bank<\/span><\/td>\n | Cover payments between banks<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nDecoding the MT400 Format: Key Fields for Businesses<\/b><\/h2>\nThe MT400 looks technical at first glance, but you do not need to understand the entire SWIFT structure. For exporters, only a few fields in Block 4 (Text Block) actually matter. These fields tell you how much was paid, what was deducted, and where the money is moving. Reading them correctly helps you reconcile invoices and spot short payments early.<\/span><\/p>\nBelow is a business-friendly way to read the most important <\/span>MT400 SWIFT<\/b> message<\/b> fields, without getting lost in banking jargon.<\/span><\/p>\nTracking the Transaction: Fields 20 and 21<\/b><\/h3>\nThese two fields help you match the MT400 to the right export order.<\/span><\/p>\n\n- Field 20 (Sender\u2019s Reference): <\/b>This is the collecting bank\u2019s internal reference for the transaction.<\/span><\/li>\n
- Field 21 (Related Reference): <\/b>This links the MT400 to your bank\u2019s original documentary collection number.<\/span><\/li>\n<\/ul>\n
Always match Field 21 with your collection advice. If this reference is wrong or missing, reconciliation delays are common.<\/span><\/p>\nThe Money Trail: Fields 32A and 33A<\/b><\/h3>\nThis is where exporters usually spot differences.<\/span><\/p>\n\n- Field 32A (Amount Collected): <\/b>The gross amount paid by the buyer.<\/span><\/li>\n
- Field 33A (Proceeds Remitted): <\/b>The net amount sent onwards to your bank.<\/span><\/li>\n<\/ul>\n
In simple terms:<\/span><\/p>\n
\n<\/span>Field 33A = Field 32A \u2013 deductions<\/b><\/p>\nIf your credited amount looks lower, these two fields explain why.<\/span><\/p>\n
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