Returns

Returns via pacs.008 (No support yet for pacs.004)

The first release of Nexus will not support a dedicated payment return process. Instead, the Destination PSP must initiate a new Nexus payment to the Source PSP and Sender.

The Destination PSP can (but is not required to) reference the original payment in the payment message in the Structured Remittance information elements. Nexus will not try to correlate this against the original payment instruction from the Source PSP.

Note that typically, a Nexus payment is processed instantly. Returns should therefore be an exceptional case.

Processing returns via a pacs.008 (Interim measure)

Currently, when a payment needs to be returned to the Sender, the Destination PSP must request a new quote and then create a new Nexus payment. The return payment does not have to use the same FX Provider as the original payment, nor does it need to follow the same route (i.e. use the same Settlement Access Providers).

The Source IPS should submit the return payment as a Nexus pacs.008 message. For Nexus, this is treated as a new payment, including for all validations and fees.

Referencing the original payment

When the Destination PSP wants to reference an earlier transaction, the original UETR can be included in the Additional Remittance Information prefixed with "NexusOrgnlUETR:" (in addition to a separate instance containing the new NexusFXQuoteId).

<RmtInf>
    <Strd>
        <AddtlRmtInf>
NexusOrgnlUETR:91398cbd-0838-453f-b2c7-536e829f2b8e
        </AddtlRmtInf>
    </Strd>
</RmtInf>

Up to three recurrences of the Additional Remittance Information element are allowed in a Nexus message.

Defining the amount to be returned

In most cases, the exchange rates available in Nexus would have changed since the Source PSP sent the original payment instruction. This will result in either the Source PSP or Destination PSP making a loss or gain as a result of the change in FX rates.

To ensure fairness, this must be handled as follows:

Scenario 1: Source PSP at fault

• The Source PSP may be at fault if (for example) the payment was sent in error, fraudulent, or the Sender requested the return.

• In this case, the Source PSP takes the FX risk

• The Destination PSP should send back exactly the amount they received in the Destination Currency.

  • The D-PSP is allowed to deduct a reasonable amount as administrative fee from the amount to be returned.

  • The Destination PSP can do this by requesting a quote from the Nexus Quotes API, specifying the amount to return denominated in the Destination currency.

• The amount requested should be the same as the Destination PSP originally received from the Destination SAP (ie the Interbank Settlement Amount in the pacs.008 processed by the Destination IPS, in the Destination Currency), minus any fee that the D-PSP charges for processing the return

• The Destination PSP must debit the Creditor by the full amount originally credited to the Creditor’s account.

• The Source PSP may receive more or less than it originally sent to the Destination PSP, due to the change in exchange rates.

• Because the return is using a normal pacs.008 payment instruction:

  • The original Source PSP becomes the new Destination PSP and must deduct the D-PSP fee (according to the standard formula in Nexus)

  • The original Source PSP may not recognize that the payment is a return, and so may process it as per a normal payment

• The Source PSP may choose to reimburse (credit) the Sender for the amount originally debited from their account (ie the Source PSP absorbs the FX risk, whether losses or gains)

  • Alternatively the Source PSP may choose to credit the Sender the amount actually received in the return payment (ie passing the FX risk onto the Debtor).

Scenario 2: Destination PSP at fault

• The Destination PSP may be at fault if (for example) they accepted a payment but then later decided that they should have rejected it, or if the Recipient refuses the payment.

• In this case the Destination PSP must take the FX risk

• The Destination PSP must return exactly the amount the Source PSP sent, in the Source currency

• The Destination PSP can do this by requesting a quote from the Nexus Quotes API, specifying the amount to return denominated in the Source currency

  • The amount to request can be calculated by taking the Interbank Settlement Amount (in Destination Currency) from the original pacs.008 and dividing it by the Exchange Rate.

• The amount the Destination PSP needs to return to the Source PSP may be more or less than the amount originally received from the Source PSP, due to changes in FX rates.

• The Destination PSP must debit the Creditor by the full amount originally credited to the Creditor’s account.

• The Destination PSP (and not the Creditor) takes any FX risk if the amount that must be returned to the Source PSP is greater than the amount that was originally received from the Source PSP.

Compensation for processing returns

When a return is initiated by the Destination PSP, the payment must be returned including the Destination PSP fee.

When a return is the result of a request by the Source PSP, the Destination PSP is allowed to deduct a reasonable amount as administrative fee from the amount to be returned. It is up to the Source PSP whether they pass the return fees onto the end-customer or reimburse the customer fully.

Note that the party that takes the FX risk may in fact benefit if the exchange rate has moved in their favour. Over a number of return payments (which are themselves rare) the losses and gains are likely to net out and any overall loss will be negligible.