Payment Chain

A payment chain is the full sequence of parties and processing steps that a payment passes through on its way from payer to payee. A simple domestic transfer may involve only the payer, the payer's bank, a clearing system, the payee's bank and the payee. A cross-border payment can be much longer, adding one or more correspondent banks or intermediary institutions, currency conversion and separate settlement systems in each country. Card payments have their own chain, running from cardholder and issuer through the network to the acquirer and merchant. Each link in the chain may add cost, time, compliance checks and risk of error, which is why reformers focus on shortening payment chains. Payment messages such as pacs.008 are designed so that information entered at the start of the chain reaches the end intact, and tracking tools such as SWIFT gpi show each step.