SWIFT MT101 Usage by parent company to pay on behalf of subsidiaries

The previous article was about the usage of the SWIFT MT101 by a parent company to pay from a subsidiary account. A parent company can also use the SWIFT MT101 to pay from its own account on behalf of multiple subsidiaries. In this article, we will see how this is performed and the information that must be provided in the SWIFT MT101 for that purpose.

The “secret” is in the field 50a Instructing Party. In the SWIFT standard, we read the following under the usage rules of that field: “This field must only be used when the instructing customer is not also the account owner.”  We will consider an example to illustrate the usage of the field 50a Instructing Party.

SWIFT MT101 Usage to pay from Parent Company on behalf of subsidiaries
SWIFT MT101 Usage to pay from a Parent Company account on behalf of many subsidiaries

The table below contains the fields that are transported in the MT101 Message. The last column (comments) provides further explanation about the fields. Read them carefully.

WP Data Tables

Read this page on the SWIFT formatting rules and Character sets of MT Messages to get the additional information and understand what 16x, 5n, 34x and the format of the field options mean.

Narratives and notes on this MT101 Message

As usual, there is more in this message than meets the eye. The following narrative and notes allow to get a deeper understanding of the message content.

Narrative and note 1 (Main purpose of this MT101)

The Sender (PUBGFRPP), Publicis Group, sends multiple transactions MT101 with a single debit account. The ordering customer account is therefore present in the sequence A. After execution, the funds for all the transactions are debited from the ordering customer account. Each sequence B occurrence contains the field 50a Instructing Party which specifies the subsidiary company on behalf of which the parent company, PUBGFRPP, sends the payment instruction.

[box type=”tick” style=”rounded”]In case the instructing party would not be present, the sender would be paying for itself.[/box]

Narrative and note 2 (Transactions 1 and 2 in this MT101)

For the first two transactions, the beneficiaries are located respectively in Switzerland and in Italy. The two countries are in the SEPA Area and the transactions are in Euro currencies and with shared fees. So both transactions can be settled as SEPA Credit Transfers through a local clearing system like STEP2.

Narrative and note 3 (Transaction 3 in this MT101)

The beneficiary of the third transaction is in the USA. The amount of the transaction is in USD currency. Since the ordering customer account is in EURO, a currency exchange from EUR to USD is needed to carry out the transaction. There are two possibilities:

  1. The ordering customer can send the order to the bank and let the bank handle the FX Deal.
  2. The ordering customer can take care of the FX deal and provide the related information to the Bank. This second option was chosen and the ordering customer provided the reference of that deal in the instruction.

[box type=”alert” size=”large” style=”rounded”]To avoid currency conversion and the related fees, a company would rather pay using a USD account provided there is enough liquidity available. [/box]

The Debtor Bank then settles the transaction through its correspondent in the USA. It is assumed that a serial payment is used. But it is possible to use a cover payment too. In that case, the MT103 announcement is sent directly to WFBIUS6S and the MT202 COV is sent to the correspondent. SWIFT MT103 and 202 COV have been analyzed in depth in a series of articles. Read them if you want to know more.

To conclude, let’s consider this question: why would a parent company pay from its account on behalf of subsidiaries? There are many reasons, but the keywords here are centralization and concentration. When a company has multiple locations, it is usually not efficient to pay service providers from each location. By centralizing the payments handling and processing in one location (generally the parent company), the company saves time and money through increased productivity and efficiency. This practice is referred to as centralized accounts payable operations. Some companies go even further and concentrate group treasury cash management functions into one office.

The SWIFT MT101 can also be used to repatriate funds. That will be the topic of the next article.


  1. Hi, Jean Paul! Thank you very much for the useful SWIFT examples. Your blog has helped me get a much better understanding of how payments work.

    There is one thing which I am still not quite clear on with respect to payments made on behalf of a subsidiary. When the beneficiary receives the payment, who would they see as the sender of the payment – the parent company or the subsidiary?

    • Hi Andreas,
      Thank you for your interest! The sender of the payment is the parent company. Instructing Party is the field that tells the beneficiary that the payment is from the subsidiary although it was sent by the parent company. Let me know if you have further questions.


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