GLOBAL PAYMENTS KNOWLEDGEISO 20022 / SWIFT / SEPA / MT / MX
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SEPA Credit Transfer through STEP2-T

A euro credit transfer cleared through STEP2-T, EBA CLEARING's pan-European retail ACH, with the resulting positions settling in central bank money in TARGET2.

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Contributor Shubham Mathure

STEP 1 / 7MESSAGE

Riya instructs Bank Alfa to pay

Riya (payer) → Bank Alfa (originator bank) · pain.001

Riya asks her bank to send a standard SEPA Credit Transfer (SCT) of EUR 900.00 to Arjun. A corporate would send a pain.001 file; a retail app creates the same instruction internally.

Step 1 of 7: Riya instructs Bank Alfa to pay

  1. 01Message
    Riya instructs Bank Alfa to payRiya (payer) → Bank Alfa (originator bank) · pain.001
  2. 02Posting
    Bank Alfa debits Riya's accountBank Alfa (originator bank)
  3. 03Message
    Bank Alfa submits the interbank transfer to STEP2-TBank Alfa (originator bank) → STEP2-T (EBA CLEARING) · pacs.008
  4. 04Clearing obligation
    STEP2-T clears the payment and calculates net positionsSTEP2-T (EBA CLEARING)
  5. 05Settlement
    The cleared positions settle in TARGET2STEP2-T (EBA CLEARING) → TARGET2 (T2)
  6. 06Message
    STEP2-T delivers the transfer to NordbankSTEP2-T (EBA CLEARING) → Nordbank (beneficiary bank) · pacs.008
  7. 07Posting
    Nordbank credits Arjun's accountNordbank (beneficiary bank)
MESSAGECLEARING OBLIGATIONSETTLEMENTPOSTING
Full step-by-step text (works without JavaScript)
  1. 01Message
    Riya instructs Bank Alfa to payRiya (payer) → Bank Alfa (originator bank) · pain.001

    Riya asks her bank to send a standard SEPA Credit Transfer (SCT) of EUR 900.00 to Arjun. A corporate would send a pain.001 file; a retail app creates the same instruction internally.

  2. 02Posting
    Bank Alfa debits Riya's accountBank Alfa (originator bank)

    Once the instruction is accepted, Bank Alfa books the debit on its own ledger. Riya's money has left her account, but no money has yet moved between the banks.

    • DR Riya's current account at Bank Alfa — EUR 900.00
  3. 03Message
    Bank Alfa submits the interbank transfer to STEP2-TBank Alfa (originator bank) → STEP2-T (EBA CLEARING) · pacs.008

    Bank Alfa converts Riya's instruction into an interbank pacs.008 and submits it into a STEP2-T processing cycle. STEP2-T is EBA CLEARING's pan-European retail automated clearing house (ACH).

  4. 04Clearing obligation
    STEP2-T clears the payment and calculates net positionsSTEP2-T (EBA CLEARING)

    STEP2-T validates the message and includes it in a clearing cycle, netting each participant's obligations. This produces who-owes-whom across the banks — not yet a movement of money.

    Clearing produces obligations, not money. Each bank now has a net position it owes or is owed — the actual funds only change hands at settlement in TARGET2.

  5. 05Settlement
    The cleared positions settle in TARGET2STEP2-T (EBA CLEARING) → TARGET2 (T2)

    The net positions calculated by STEP2-T settle across the banks' accounts in central bank money in TARGET2 (T2). Only now has money actually moved between Bank Alfa and Nordbank.

    • DR Bank Alfa settlement account in TARGET2 — EUR 900.00
    • CR Nordbank settlement account in TARGET2 — EUR 900.00
  6. 06Message
    STEP2-T delivers the transfer to NordbankSTEP2-T (EBA CLEARING) → Nordbank (beneficiary bank) · pacs.008

    STEP2-T forwards the pacs.008 with the full payment details to Nordbank so it can credit the right beneficiary account for Arjun.

  7. 07Posting
    Nordbank credits Arjun's accountNordbank (beneficiary bank)

    Nordbank books the credit for the beneficiary. The transfer is complete end to end: Riya debited, the banks settled in T2, and Arjun credited.

    • CR Arjun's current account at Nordbank — EUR 900.00

What this simplifies: One payment through a single STEP2-T clearing cycle and one TARGET2 settlement; real STEP2-T netting batches many payments from many participants across several daily cycles.

LEARN THE CONCEPTS BEHIND THIS FLOW

Sources for this flow2
  1. Scheme-specific rule

    EBA CLEARING payment systems (STEP2-T and RT1) ↗ — EBA CLEARING

    Describes the pan-European payment systems operated by EBA CLEARING, including STEP2-T for SEPA batch clearing and RT1 for SCT Inst instant payments. · Checked 2026-07-12

    Participant rulebooks and full technical documentation for STEP2 and RT1 are not public; content here relies on the operator's public pages.

  2. Simplified educational illustration

    Payments Signal editorial teaching models — Payments Signal

    This site's own simplified teaching models. · Checked 2026-07-12

    What this simplifies: A single payment shown through one STEP2-T cycle and one TARGET2 settlement; multiple daily cycles, netting across many participants, and indirect participation are omitted.

    Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.