Payments Academy
Account taxonomy overview PAYMENT OPERATIONS STARTED LIVE 01 Account taxonomy overview - record of a claim ACTIVE 02 Rules - suspense account must be aged QUEUED 03 GBP 25,000 payment across account types - customer owns the current and QUEUED 04 Account owners and systems - Each failure has a different owner QUEUED 05 Failure by account type - Ask how long an item may sit in suspense QUEUED 06 Account type checklist - Takeaway: current and savings accounts hold QUEUED An account is a record of a claim, and the type of account decides what the claim is, who can move it, and what happens when it is wrong. Step 1 of 6 Account taxonomy overview STARTED Account taxonomy overview record of a claim ACTIVE Rules suspense account must be aged QUEUED GBP 25,000 payment across account types customer owns the current and savings QUEUED Account owners and systems Each failure has a different owner QUEUED Failure by account type Ask how long an item may sit in suspense QUEUED Account type checklist Takeaway: current and savings accounts hold QUEUED An account is a record of a claim, and the type of account decides what the claim is, who can move it, and what happens when it is wrong.
Rules for each account type PAYMENT OPERATIONS IN PROGRESS LIVE 01 Account taxonomy overview - record of a claim DONE 02 Rules - suspense account must be aged ACTIVE 03 GBP 25,000 payment across account types - customer owns the current and QUEUED 04 Account owners and systems - Each failure has a different owner QUEUED 05 Failure by account type - Ask how long an item may sit in suspense QUEUED 06 Account type checklist - Takeaway: current and savings accounts hold QUEUED A suspense account must be aged, reviewed daily, and cleared within a defined period, because an old suspense item is an unreconciled break. Step 2 of 6 Rules for each account type IN PROGRESS Account taxonomy overview record of a claim DONE Rules suspense account must be aged ACTIVE GBP 25,000 payment across account types customer owns the current and savings QUEUED Account owners and systems Each failure has a different owner QUEUED Failure by account type Ask how long an item may sit in suspense QUEUED Account type checklist Takeaway: current and savings accounts hold QUEUED A suspense account must be aged, reviewed daily, and cleared within a defined period, because an old suspense item is an unreconciled break.
GBP 25,000 payment across account types PAYMENT OPERATIONS IN PROGRESS LIVE 01 Account taxonomy overview - record of a claim DONE 02 Rules - suspense account must be aged DONE 03 GBP 25,000 payment across account types - customer owns the current and ACTIVE 04 Account owners and systems - Each failure has a different owner QUEUED 05 Failure by account type - Ask how long an item may sit in suspense QUEUED 06 Account type checklist - Takeaway: current and savings accounts hold QUEUED The customer owns the current and savings accounts, and the bank is the debtor for the balance. Step 3 of 6 GBP 25,000 payment across account types IN PROGRESS Account taxonomy overview record of a claim DONE Rules suspense account must be aged DONE GBP 25,000 payment across account types customer owns the current and savings ACTIVE Account owners and systems Each failure has a different owner QUEUED Failure by account type Ask how long an item may sit in suspense QUEUED Account type checklist Takeaway: current and savings accounts hold QUEUED The customer owns the current and savings accounts, and the bank is the debtor for the balance.
Account owners and systems PAYMENT OPERATIONS IN PROGRESS LIVE 01 Account taxonomy overview - record of a claim DONE 02 Rules - suspense account must be aged DONE 03 GBP 25,000 payment across account types - customer owns the current and DONE 04 Account owners and systems - Each failure has a different owner ACTIVE 05 Failure by account type - Ask how long an item may sit in suspense QUEUED 06 Account type checklist - Takeaway: current and savings accounts hold QUEUED Each failure has a different owner, a different system and a different fix. Step 4 of 6 Account owners and systems IN PROGRESS Account taxonomy overview record of a claim DONE Rules suspense account must be aged DONE GBP 25,000 payment across account types customer owns the current and savings DONE Account owners and systems Each failure has a different owner ACTIVE Failure by account type Ask how long an item may sit in suspense QUEUED Account type checklist Takeaway: current and savings accounts hold QUEUED Each failure has a different owner, a different system and a different fix.
Failure by account type PAYMENT OPERATIONS IN PROGRESS LIVE 01 Account taxonomy overview - record of a claim DONE 02 Rules - suspense account must be aged DONE 03 GBP 25,000 payment across account types - customer owns the current and DONE 04 Account owners and systems - Each failure has a different owner DONE 05 Failure by account type - Ask how long an item may sit in suspense ACTIVE 06 Account type checklist - Takeaway: current and savings accounts hold QUEUED Ask how long an item may sit in suspense, who reviews it, and who approves a write-off. Step 5 of 6 Failure by account type IN PROGRESS Account taxonomy overview record of a claim DONE Rules suspense account must be aged DONE GBP 25,000 payment across account types customer owns the current and savings DONE Account owners and systems Each failure has a different owner DONE Failure by account type Ask how long an item may sit in suspense ACTIVE Account type checklist Takeaway: current and savings accounts hold QUEUED Ask how long an item may sit in suspense, who reviews it, and who approves a write-off.
Account type checklist for a BA PAYMENT OPERATIONS COMPLETE LIVE 01 Account taxonomy overview - record of a claim DONE 02 Rules - suspense account must be aged DONE 03 GBP 25,000 payment across account types - customer owns the current and DONE 04 Account owners and systems - Each failure has a different owner DONE 05 Failure by account type - Ask how long an item may sit in suspense DONE 06 Account type checklist - Takeaway: current and savings accounts hold ACTIVE Takeaway: current and savings accounts hold customer deposits Step 6 of 6 Account type checklist for a BA COMPLETE Account taxonomy overview record of a claim DONE Rules suspense account must be aged DONE GBP 25,000 payment across account types customer owns the current and savings DONE Account owners and systems Each failure has a different owner DONE Failure by account type Ask how long an item may sit in suspense DONE Account type checklist Takeaway: current and savings accounts hold ACTIVE Takeaway: current and savings accounts hold customer deposits

Key points of this lesson, in order.

0:00 / 6:33 Step 1 of 6

Account taxonomy: current, savings, nostro, vostro, suspense, settlement, clearing, transit and wash

Accounts and balances, Lesson 1 of 4, Narration 6:33, D02 Accounts, ledger and accounting

Suspense accountTransit accountReconciliation

What you will learn

Your objective. By the end of this lesson, you will be able to explain account taxonomy: current, savings, nostro, vostro, suspense, settlement, clearing, transit and wash. An account is a record of a claim, and the type of account decides what the claim is, who can move it, and what happens when it is wrong.

Why it matters. Takeaway: current and savings accounts hold customer deposits, nostro and vostro accounts are the two views of the same correspondent balance, suspense holds items that cannot yet be posted, settlement holds amounts due to or from a clearing system, and transit and wash accounts must net to zero.

Chapter objective: Every account a bank holds, and what a balance really means

Key learning points

  • Account taxonomy overview
  • Rules for each account type
  • GBP 25,000 payment across account types
  • Account owners and systems
  • Failure by account type
  • Account type checklist for a BA

Key terms

Suspense account: A temporary account used to hold funds or entries that cannot yet be posted to their final account. Banks use suspense accounts for unidentified receipts, pending investigations and items awaiting...

Transit account: An internal account used to hold funds temporarily while they move between systems or accounts. Transit accounts record the movement of money during settlement, currency conversion or internal...

Reconciliation: The process of comparing records from two sources, such as a bank statement and an internal ledger, to confirm they agree.

Correspondent banking diagram showing Account taxonomy: current, savings, nostro, vostro, suspense, settlement, clearing, transit and wash.

Practise this lesson

Exercise

A customer of Bank A holds a current account with GBP 50,000 and a savings account with GBP 200,000, and instructs a GBP 25,000 payment to a supplier in Germany. Trace the payment through the account types in this lesson.

Use the worked example: current account, savings account, euro nostro account, supplier current account, suspense account and transit account.

  1. What to do. State which account is debited, which nostro moves, and where the EUR 500 item with a missing reference goes.

Correct result. Bank A debits the current account, not the savings account, so it falls to GBP 25,000; the euro nostro at Bank B falls by EUR 29,000; the EUR 500 item with a missing reference is parked in a suspense account; the settlement item passes through a transit account that nets to zero.

Why. Each account type does a different job and is reconciled against a different source.

Check your understanding

Practice question

Which account must net to zero at the end of the day?

Takeaway and next step

What to remember

Takeaway: current and savings accounts hold customer deposits, nostro and vostro accounts are the two views of the same correspondent balance, suspense holds items that cannot yet be posted, settlement holds amounts due to or from a clearing system, and transit and wash accounts must net to zero.

Follow GBP 50,000 through every stage, from instruction to beneficiary credit, and note where it can stop.

Open the Payment Lifecycle Simulator →

Builds on "Money and payment instruments".

Transcript and full text

Show transcript

An account is a record of a claim, and the type of account decides what the claim is, who can move it, and what happens when it is wrong. A current account holds a customer demand deposit that can be drawn on at any time, and it is the account from which most payments are made. A savings account holds a deposit that earns interest and may have withdrawal limits, and it is not normally used for daily payment instructions. A clearing account holds items in transit between systems, and a transit or wash account holds items that pass through and must net to zero. Source: Bank for International Settlements, Committee on Payments and Market Infrastructures; ISO 20022 cash management messages, camt.052 and camt.053. The rules for each account type are different, and confusing them creates breaks that are hard to clear. A current account can be overdrawn only within an agreed limit, and an overdraft is a loan that must be priced and approved. A savings account may not be overdrawn, and a payment instruction drawn on it should be rejected. A vostro account is a liability of the holding bank, and the bank must be able to pay out on demand, subject to cut-offs and screening. A suspense account must be aged, reviewed daily, and cleared within a defined period, because an old suspense item is an unreconciled break. A wash account must net to zero at the end of the day, and any balance left in it is a posting error by definition. A worked example shows the taxonomy in one payment. A customer of Bank A in London holds a current account with GBP 50,000 and a savings account with GBP 200,000, and instructs a GBP 25,000 payment to a supplier in Germany. Bank A debits the current account, not the savings account, and the current balance falls to GBP 25,000. Bank A pays through its euro nostro account at Bank B in Frankfurt, so the nostro balance falls by EUR 29,000, the euro equivalent. During the day a EUR 500 item arrives with a missing reference, so operations parks it in a suspense account, and a EUR 29,000 settlement item passes through a transit account that nets to zero by the close. Each account did a different job, and each is reconciled against a different source. The parties and the systems that own each account are distinct. The customer owns the current and savings accounts, and the bank is the debtor for the balance. The bank owns the nostro account, and the correspondent bank is the debtor. The bank owns the vostro account as a liability, and the foreign bank is the creditor. Treasury owns the settlement account, and the clearing system is the counterparty. The core banking system holds the customer accounts, the nostro management system holds the nostro and vostro accounts, and the payment hub holds the transit and wash accounts, and the three systems must agree at the end of the day, with the general ledger as the single record. Failure is account specific, and the failure handling follows the account type. A payment drawn on a savings account that does not allow payments is rejected with a reason code, and the customer must be told to use the current account. A suspense account that grows is a warning that instructions are arriving with missing data, and the fix is in the instruction capture, not in the suspense process. A wash account that does not net to zero means a posting is missing or duplicated, and the investigation starts with the payment that left the balance, not with the account itself. Each failure has a different owner, a different system and a different fix. The effect on the bank, the customer and operations is that the account type decides the customer experience and the control. For the customer, the difference between a current and a savings account is whether the payment is allowed, how fast it arrives and what it costs. For the bank, the nostro and vostro accounts are its liquidity and its credit exposure to other banks, and they are managed by treasury under limits that the board approves. A business analyst must name the account type for every debit and credit in a requirement, because the posting rule, the reconciliation source and the failure handling all follow from it. For a business analyst, product owner or subject matter expert, the taxonomy is a checklist for every payment flow. Ask which account is debited, which is credited, what type each account is, who owns it, what system holds it, and what source reconciles it. Ask what happens when the account does not exist, is closed, is frozen, has insufficient funds, or is the wrong type for the payment. Ask how long an item may sit in suspense, who reviews it, and who approves a write-off. The ISO 20022 camt.052 intraday report and camt.053 end of day statement report the balances for each account type, and the account type is carried in the message, so the reconciliation can be automated if the mapping is correct. A requirement that says only account, without naming the type, is incomplete. Two accounts deserve a special warning because they are often misused. The first is the suspense account, which is a temporary parking place, not a permanent home, and a product that routes exceptions to suspense without an ageing rule and a clearance owner will accumulate breaks that nobody owns. The second is the wash or transit account, which must net to zero, and a product that posts fees, charges or foreign exchange differences into a wash account will hide them from the profit and loss account and from the customer. The correct design is that a wash account holds only items in transit between two postings that happen on the same day, and any difference is posted to a proper income, expense or foreign exchange account, with the customer charged only what was disclosed. Takeaway: current and savings accounts hold customer deposits, nostro and vostro accounts are the two views of the same correspondent balance, suspense holds items that cannot yet be posted, settlement holds amounts due to or from a clearing system, and transit and wash accounts must net to zero. Name the account type for every debit and credit, state who owns it and what reconciles it, and age suspense daily. Further reading: Bank for International Settlements, Committee on Payments and Market Infrastructures, A glossary of terms used in payments and settlement systems; ISO 20022, camt.052 and camt.053 account reporting. Last reviewed 7 November 2026.

An account is a record of a claim, and the type of account decides what the claim is, who can move it, and what happens when it is wrong. A current account holds a customer demand deposit that can be drawn on at any time, and it is the account from which most payments are made. A savings account holds a deposit that earns interest and may have withdrawal limits, and it is not normally used for daily payment instructions. A clearing account holds items in transit between systems, and a transit or wash account holds items that pass through and must net to zero. Source: Bank for International Settlements, Committee on Payments and Market Infrastructures; ISO 20022 cash management messages, camt.052 and camt.053.

The rules for each account type are different, and confusing them creates breaks that are hard to clear. A current account can be overdrawn only within an agreed limit, and an overdraft is a loan that must be priced and approved. A savings account may not be overdrawn, and a payment instruction drawn on it should be rejected. A vostro account is a liability of the holding bank, and the bank must be able to pay out on demand, subject to cut-offs and screening. A suspense account must be aged, reviewed daily, and cleared within a defined period, because an old suspense item is an unreconciled break. A wash account must net to zero at the end of the day, and any balance left in it is a posting error by definition.

A worked example shows the taxonomy in one payment. A customer of Bank A in London holds a current account with GBP 50,000 and a savings account with GBP 200,000, and instructs a GBP 25,000 payment to a supplier in Germany. Bank A debits the current account, not the savings account, and the current balance falls to GBP 25,000. Bank A pays through its euro nostro account at Bank B in Frankfurt, so the nostro balance falls by EUR 29,000, the euro equivalent. During the day a EUR 500 item arrives with a missing reference, so operations parks it in a suspense account, and a EUR 29,000 settlement item passes through a transit account that nets to zero by the close. Each account did a different job, and each is reconciled against a different source.

The parties and the systems that own each account are distinct. The customer owns the current and savings accounts, and the bank is the debtor for the balance. The bank owns the nostro account, and the correspondent bank is the debtor. The bank owns the vostro account as a liability, and the foreign bank is the creditor. Treasury owns the settlement account, and the clearing system is the counterparty. The core banking system holds the customer accounts, the nostro management system holds the nostro and vostro accounts, and the payment hub holds the transit and wash accounts, and the three systems must agree at the end of the day, with the general ledger as the single record.

Failure is account specific, and the failure handling follows the account type. A payment drawn on a savings account that does not allow payments is rejected with a reason code, and the customer must be told to use the current account. A suspense account that grows is a warning that instructions are arriving with missing data, and the fix is in the instruction capture, not in the suspense process. A wash account that does not net to zero means a posting is missing or duplicated, and the investigation starts with the payment that left the balance, not with the account itself. Each failure has a different owner, a different system and a different fix.

The effect on the bank, the customer and operations is that the account type decides the customer experience and the control. For the customer, the difference between a current and a savings account is whether the payment is allowed, how fast it arrives and what it costs. For the bank, the nostro and vostro accounts are its liquidity and its credit exposure to other banks, and they are managed by treasury under limits that the board approves. A business analyst must name the account type for every debit and credit in a requirement, because the posting rule, the reconciliation source and the failure handling all follow from it.

For a business analyst, product owner or subject matter expert, the taxonomy is a checklist for every payment flow. Ask which account is debited, which is credited, what type each account is, who owns it, what system holds it, and what source reconciles it. Ask what happens when the account does not exist, is closed, is frozen, has insufficient funds, or is the wrong type for the payment. Ask how long an item may sit in suspense, who reviews it, and who approves a write-off. The ISO 20022 camt.052 intraday report and camt.053 end of day statement report the balances for each account type, and the account type is carried in the message, so the reconciliation can be automated if the mapping is correct. A requirement that says only account, without naming the type, is incomplete.

Two accounts deserve a special warning because they are often misused. The first is the suspense account, which is a temporary parking place, not a permanent home, and a product that routes exceptions to suspense without an ageing rule and a clearance owner will accumulate breaks that nobody owns. The second is the wash or transit account, which must net to zero, and a product that posts fees, charges or foreign exchange differences into a wash account will hide them from the profit and loss account and from the customer. The correct design is that a wash account holds only items in transit between two postings that happen on the same day, and any difference is posted to a proper income, expense or foreign exchange account, with the customer charged only what was disclosed.

Takeaway: current and savings accounts hold customer deposits, nostro and vostro accounts are the two views of the same correspondent balance, suspense holds items that cannot yet be posted, settlement holds amounts due to or from a clearing system, and transit and wash accounts must net to zero. Name the account type for every debit and credit, state who owns it and what reconciles it, and age suspense daily. Further reading: Bank for International Settlements, Committee on Payments and Market Infrastructures, A glossary of terms used in payments and settlement systems; ISO 20022, camt.052 and camt.053 account reporting. Last reviewed 7 November 2026.

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