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Payment reversals (returns)

A payment reversal (return) means that the payment is canceled and the money is sent back to the sender.

Reasons for Payment Reversal​

A payment could be reversed due to:

  • Fraud
  • Customer request
  • Technical issues
  • Etc.

Payment reversals will usually be handled by bank employees.
The reversal process differs based on the type of payment.

Internal Payments​

Since internal payments are made inside the bank, there is no need to contact any external banks or systems when reversing such payments.

  • If a reversal is triggered, either:

    • The payment record itself will be canceled, and the payment will disappear from the customer statement (usually if reversed the same day), or
    • A reverse payment entry will appear with the same negative amount as the original payment, so the customer sees two entries on their statement.

  • It is important to test both cases depending on whether the bank supports them.

  • If a 2nd payment entry is created:

    • Test how this entry will appear in the customer statement.
    • Logic differs by bank; the negative amount may appear along with text like:
      "Payment reversal - <original payment amount>, <original payment receiver name>".

SEPA / Instant Payments​

The logic for SEPA and Instant payments is very similar.

Key difference:

  • SEPA payments can be returned without a recall request from the other bank.
  • Instant payments can only be returned after the sender bank requests a payment recall (using the official Instant payment integration).

Typical flow:

  1. Payment is sent (pacs.008 message) to the receiver bank.
  2. Sender bank requests a payment recall (camt.056 message) to the receiver bank.
  3. Receiver bank decides to:
    • Accept the recall and return the money (pacs.004 message sent to the original sender bank).
    • Reject the recall and do not return the money (camt.029 message sent to the original sender bank).

Examples of Instant Payment recall flow messages (Latvia Central Bank):

Testing Suggestions​

When a reverse payment entry is created due to a payment reversal:

  • Understand the bank logic when generating the details.
  • Typically, the entry will contain the same information as the original payment:
    • Amount
    • Names
    • Address info
    • Personal identifiers
    • Accounts
  • Verify these details both in:
    • Messages sent to the Instant/SEPA payment system
    • Customer statements