| Field | Meaning | Required |
|---|---|---|
:20: | A unique reference assigned by the sending bank for this advice. It identifies the advice in both banks systems and lets operations teams trace it. It must not | M |
:21: | The reference of the original collection or cheque instruction that this advice relates to. It links the payment advice to the collection the beneficiary bank i | M |
:25: | The account that was credited with the payment, identified by account number. It tells the receiver exactly which account received the funds. A wrong account nu | O |
:32A: | The value date, ISO currency code and amount of the payment, for example 261106EUR48250,00. The receiver compares it with its expected collection amount to conf | M |
:52a: | The institution that ordered the payment, when it differs from the sender of the MT400. It identifies the true originator of the payment instruction. The field | O |
:53a: | The bank that presented the cheque or collection for payment. It identifies the presenting bank in the collection chain. The receiver uses it to confirm the pay | O |
:50a: | The drawer of the cheque or the party that issued the collection instruction. It gives the name and account of the party whose funds were used. The receiver use | O |
:59a: | The beneficiary of the payment, identified by account number and name. The receiving bank credits this party on the value date. The field confirms the funds rea | M |
:72: | Additional information from sender to receiver, such as a narrative explaining the payment or a code for the payment type. It can carry the cheque number or the | O |
:71B: | Details of any charges deducted from the payment, with the charge type and amount in free text. It explains why the advised amount differs from the original col | O |
:30: | The date on which the cheque or collection was paid, when it differs from the value date in field 32A. It tells the receiver when the payment was actually made. | O |
Harbour Bank sends an MT400 to Meridian Bank advising payment of EUR 48,250.00 on 6 November 2026 for collection reference COLL99214, drawn on a Madrid corporate. The related reference matches the outstanding collection, the value date matches the payment date, and Meridian credits the beneficiary and closes the collection.
Valid example from the message catalogue. Scheme rules: MT400 follows the SWIFT collection and cheque advice rules and remains in use for documentary collections and cheque clearing, which have no ISO 20022 equivalent in general use. Domestic cheque cleari
Documentary Credit with a Notifying Bank, and Documentary Collection
What you will learn
Your objective. By the end of this lesson, you will be able to explain documentary credit with a notifying bank. A notifying bank is a bank that tells the beneficiary that a documentary credit has been issued, without taking on the advising role in the usual sense.
Why it matters. For a business analyst, the distinction matters for the message flow, because the credit may pass through a notifying bank before it reaches the advising bank, and each hop must be recorded with its date and its role.
Chapter objective: How banks help exporters and importers trade safely across borders
Key learning points
- Notifying bank
- Documentary collection
- Collecting bank
- Drawee: importer
- Collecting bank presents
- Importer pays EUR 20,000
Key terms
Documentary credit: A letter of credit, a bank undertaking to pay a seller when the seller presents documents that comply with the credit terms.
Bill of exchange: A written order by one party instructing another party to pay a stated amount to a named person on a stated date.
Return: A payment that is sent back to the sender after settlement because it cannot be credited to the beneficiary.
SWIFT MT message viewer showing Documentary Credit with a Notifying Bank, and Documentary Collection.
Practise this lesson
Exercise
Trace the payment in this lesson through its lifecycle stages.
Use the lifecycle stages in this lesson: acceptance, processing, clearing, settlement, beneficiary credit, ledger posting and reconciliation.
- What to do. Name each stage, state what happens, and say when the payment is truly final.
Correct result. Acceptance validates the instruction. Processing prepares it. Clearing sorts and nets it. Settlement moves the funds. Beneficiary credit puts the money in the creditor account. Ledger posting records it. Reconciliation proves it. Finality is only at settlement, not at acceptance or at status update.
Why. The lifecycle is the map of a payment. If you cannot say which stage a payment is in, you cannot answer where the money is.
Check your understanding
Practice question
Which of the following best describes documentary credit with a notifying bank?
Takeaway and next step
What to remember
For a business analyst, the distinction matters for the message flow, because the credit may pass through a notifying bank before it reaches the advising bank, and each hop must be recorded with its date and its role.
Build a cross-border payment like the one in this lesson and watch the chain, the charges, and the final amount change.
Open the Cross-Border Payment Configurator →
Builds on "Documentary Credit with a Confirming Bank".
Transcript and full text
Show transcript
A notifying bank is a bank that tells the beneficiary that a documentary credit has been issued, without taking on the advising role in the usual sense. In practice, the term is used when the issuing bank sends the credit to a bank that is not the exporter usual bank, and that bank simply passes the notification on, often because the advising bank is not known at the time of issue. The notifying bank checks the apparent authenticity of the message and forwards it, but it makes no payment promise and it does not add confirmation. For a business analyst, the distinction matters for the message flow, because the credit may pass through a notifying bank before it reaches the advising bank, and each hop must be recorded with its date and its role. A documentary collection is an instruction from an exporter to its bank to collect payment from the importer in exchange for shipping documents. The exporter ships the goods, gives the documents to its bank, and the bank sends them to a bank in the importer country with instructions to release them only when the importer pays or accepts a bill of exchange. The banks act as agents for the exporter, and they do not promise to pay if the importer refuses. The collection is governed by the ICC Uniform Rules for Collections, known as URC 522, and it is cheaper than a documentary credit, because no bank gives a payment undertaking and no credit line is needed for the full amount. If the importer refuses, the collecting bank holds the documents and asks the exporter for instructions, which may be to store the goods, return them, or find another buyer. The actors in a collection are the principal, the remitting bank, the collecting bank, the presenting bank, and the drawee. The principal is the exporter who asks for the collection. The remitting bank is the exporter bank, which sends the documents and the collection instruction. The collecting bank is a bank in the importer country that receives the documents, and the presenting bank is the bank that shows them to the importer. The drawee is the importer, who must pay or accept before the documents are released. The collection instruction is sent by SWIFT MT400, and the banks report the outcome with MT410 for acknowledgement, MT412 for acceptance, and MT422 for payment advice, among others. The collection flow has four clear steps. First, the exporter ships the goods and gives the documents, the invoice, the bill of lading and the collection instruction to the remitting bank. Second, the remitting bank checks the instruction and sends the documents to the collecting bank with an MT400, stating whether the documents are released against payment or against acceptance. Third, the collecting bank presents the documents to the importer, who either pays at once or accepts a bill of exchange promising to pay later. Fourth, the collecting bank releases the documents, the importer collects the goods, and the payment is remitted back to the exporter through the banks. Each step is a message and a ledger entry, and each step can fail. For example, an exporter ships goods worth EUR 20,000 and asks its bank to collect payment through a documentary collection. The exporter bank sends the bill of lading and the invoice to a bank in the importer country with an instruction to release the documents only against payment. The importer pays EUR 20,000, the bank releases the documents, and the payment is remitted back to the exporter through the banks.
A notifying bank is a bank that tells the beneficiary that a documentary credit has been issued, without taking on the advising role in the usual sense. In practice, the term is used when the issuing bank sends the credit to a bank that is not the exporter usual bank, and that bank simply passes the notification on, often because the advising bank is not known at the time of issue. The notifying bank checks the apparent authenticity of the message and forwards it, but it makes no payment promise and it does not add confirmation. For a business analyst, the distinction matters for the message flow, because the credit may pass through a notifying bank before it reaches the advising bank, and each hop must be recorded with its date and its role.
A documentary collection is an instruction from an exporter to its bank to collect payment from the importer in exchange for shipping documents. The exporter ships the goods, gives the documents to its bank, and the bank sends them to a bank in the importer country with instructions to release them only when the importer pays or accepts a bill of exchange. The banks act as agents for the exporter, and they do not promise to pay if the importer refuses. The collection is governed by the ICC Uniform Rules for Collections, known as URC 522, and it is cheaper than a documentary credit, because no bank gives a payment undertaking and no credit line is needed for the full amount. If the importer refuses, the collecting bank holds the documents and asks the exporter for instructions, which may be to store the goods, return them, or find another buyer.
The actors in a collection are the principal, the remitting bank, the collecting bank, the presenting bank, and the drawee. The principal is the exporter who asks for the collection. The remitting bank is the exporter bank, which sends the documents and the collection instruction. The collecting bank is a bank in the importer country that receives the documents, and the presenting bank is the bank that shows them to the importer. The drawee is the importer, who must pay or accept before the documents are released. The collection instruction is sent by SWIFT MT400, and the banks report the outcome with MT410 for acknowledgement, MT412 for acceptance, and MT422 for payment advice, among others.
The collection flow has four clear steps. First, the exporter ships the goods and gives the documents, the invoice, the bill of lading and the collection instruction to the remitting bank. Second, the remitting bank checks the instruction and sends the documents to the collecting bank with an MT400, stating whether the documents are released against payment or against acceptance. Third, the collecting bank presents the documents to the importer, who either pays at once or accepts a bill of exchange promising to pay later. Fourth, the collecting bank releases the documents, the importer collects the goods, and the payment is remitted back to the exporter through the banks. Each step is a message and a ledger entry, and each step can fail.
For example, an exporter ships goods worth EUR 20,000 and asks its bank to collect payment through a documentary collection. The exporter bank sends the bill of lading and the invoice to a bank in the importer country with an instruction to release the documents only against payment. The importer pays EUR 20,000, the bank releases the documents, and the payment is remitted back to the exporter through the banks.
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