From the course: Fundamentals of Payments
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Customer-to-bank space and interbank space
From the course: Fundamentals of Payments
Customer-to-bank space and interbank space
Payment information exchange happens in two spaces: the customer-to-bank space and the interbank space. The four-corner model is presented here so as to highlight these two spaces. What are these two spaces, and why is it important to clearly distinguish them? Let's consider the customer-to-bank space first. It is the space where customers and banks exchange payment information, generally through standardized messages. When the information is sent from the customer to the bank, these are orders of instructions. For instance, the customer may ask the bank to debit his account and credit one or many beneficiary accounts, as it is the case for credit transfer instructions. Or the customer may ask the bank to debit the debtor's accounts and credit his own account, as it is the case for direct debit instructions. Another option is the customer asking the bank to cancel a previously sent instruction. In any case, the customer asks the bank to do something about a payment order or…
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