pacs.004 — PaymentReturn

Overview

pacs.004 is the interbank payment return message. It is sent by the Creditor Bank back to the Debtor Bank when a previously received pacs.008 credit transfer cannot be applied to the beneficiary's account. The message carries the original payment details and the reason why funds are being returned.

Full name: PaymentReturnV10
Namespace: urn:iso:std:iso:20022:tech:xsd:pacs.004.001.10
Direction: Creditor Bank → (Network) → Debtor Bank
Triggered by: Failed credit application after pacs.008 received

⚠️ A pacs.004 means funds have already moved to the creditor bank and are now being sent back. This is different from a pacs.002 RJCT which means funds were never applied in the first place.

pacs.004 in Context

ORIGINAL PAYMENT:
Debtor Bank ──[pacs.008]──────────────────────────► Creditor Bank
            ◄──[pacs.002 ACSP]────────────────────── (accepted, settling)

RETURN (when credit fails):
Creditor Bank ──[pacs.004]────────────────────────► Debtor Bank
              (funds sent back)

Message Structure

pacs.004
├── GrpHdr (Group Header)                         ← 1..1
│   ├── MsgId                                     Unique return message ID
│   ├── CreDtTm                                   Timestamp
│   ├── NbOfTxs                                   Number of transactions being returned
│   ├── TtlRtrdIntrBkSttlmAmt                     Total returned settlement amount
│   ├── IntrBkSttlmDt                             Return settlement date
│   └── SttlmInf                                  Settlement details for the return
│
└── TxInf (Transaction Information)               ← 1..n
    ├── RtrId                                     Return transaction ID (new, unique)
    ├── OrgnlGrpInf                               References to original message
    │   ├── OrgnlMsgId                            pacs.008 MsgId
    │   └── OrgnlMsgNmId                          "pacs.008.001.10"
    ├── OrgnlInstrId                              Original InstrId (from pacs.008)
    ├── OrgnlEndToEndId                           Original EndToEndId (preserved)
    ├── OrgnlTxId                                 Original TxId (from pacs.008)
    ├── OrgnlUETR                                 Original UETR (SWIFT payments)
    ├── RtrdIntrBkSttlmAmt Ccy="AUD"             Amount being returned
    ├── IntrBkSttlmDt                             Settlement date for return
    ├── RtrdInstdAmt Ccy="AUD"                   Original instructed amount
    ├── ChrgBr                                    Charge bearer for return
    ├── RtrChain                                  Return payment chain info
    │   ├── Assgnr                                Who is returning (creditor bank)
    │   └── Assgne                                Who receives return (debtor bank)
    ├── RtrRsnInf                                 Return reason
    │   ├── Orgtr                                 Who initiated the return
    │   └── Rsn → Cd                              Reason code (e.g., AC04)
    ├── OrgnlTxRef                                Key fields echoed from original
    │   ├── Dbtr                                  Original debtor
    │   ├── DbtrAcct                              Original debtor account
    │   ├── Cdtr                                  Original creditor
    │   └── CdtrAcct                              Original creditor account
    └── SplmtryData                               Optional supplementary data

Return Reason Codes

These are the ISO 20022 standard reason codes for pacs.004:

Account Issues

Code	Reason	Description
`AC01`	Incorrect Account Number	Account does not exist
`AC03`	Invalid Creditor Account Type	Account cannot receive this payment type
`AC04`	Closed Account Number	Account has been closed
`AC05`	Closed Debtor Account Number	Debtor account closed (less common in returns)
`AC06`	Blocked Account	Account is frozen/blocked
`AC13`	Invalid Debtor Account Type	Account type not appropriate

Amount Issues

Code	Reason	Description
`AM09`	Wrong Amount	Amount is incorrect per agreement
`AM10`	Invalid Control Sum	Control sum does not match
`AM14`	Amount exceeds agreed maximum	Over limit

Creditor-Initiated Returns

Code	Reason	Description
`CUST`	Requested by Customer	Beneficiary requests return of funds
`DUPL`	Duplicate Payment	Beneficiary received same payment twice
`FOCR`	Following Cancellation Request	Response to a camt.056 recall request
`MD06`	Refusal by End Customer	Beneficiary refuses the credit
`MS02`	Not Specified Reason Customer Generated	Unspecified customer reason
`MS03`	Not Specified Reason Agent Generated	Unspecified bank reason

Regulatory & Compliance

Code	Reason	Description
`RR01`	Missing Debtor Account or ID	Regulatory — missing info
`RR02`	Missing Debtor Name or Address	Regulatory — missing info
`RR03`	Missing Creditor Name or Address	Regulatory — missing info
`RR04`	Regulatory Reason	Sanction/compliance block

Technical

Code	Reason	Description
`FF01`	Invalid File Format	Message format error
`NARR`	Narrative	Free-text reason (use sparingly)

pacs.004 Return Flow

Scenario: Creditor Account Closed

Day 1:
Debtor Bank ──[pacs.008]──────────────────────────► Creditor Bank
            ◄──[pacs.002 ACSP]────────────────────── 
            RBA settles ESA funds ─────────────────►

Day 1–5 (within return window):
Creditor Bank discovers account AC04 (closed)
Creditor Bank ──[pacs.004 AC04]──────────────────► Debtor Bank
              Return settlement via same scheme

Debtor Bank:
  ├── Receives pacs.004
  ├── Credits customer account (return of debit)
  ├── Sends camt.054 (CRDT, RvslInd=false, narrative "Return of payment")
  └── Sends pain.002 status update to customer (if applicable)

Return Windows (Maximum Time Allowed)

Scheme	Return Window	Notes
NPP (AU)	14 calendar days	Per NPP scheme rules
BECS/DE (AU)	5 business days	Dishonour window
SWIFT	10 business days (guideline)	No hard legal maximum
SEPA (EU)	D+5 business days	EC Payment Services Directive

After the return window, the creditor bank can no longer force a return through the scheme. Manual bilateral recovery is needed.

pacs.004 vs pacs.002 RJCT

This is one of the most important distinctions in payments:

	pacs.002 RJCT	pacs.004
Timing	Before or at settlement	After settlement
Funds moved?	❌ No — payment blocked	✅ Yes — funds already at creditor bank
Who sends it	Clearing network or creditor bank	Creditor bank only
Trigger	Validation failure	Credit application failure
Debtor action	Release debit hold / reverse	Await return settlement
Customer impact	No funds left	Funds temporarily at other bank

Receiving a pacs.004 — Debtor Bank Processing

Receive pacs.004
     │
     ▼
Extract OrgnlTxId
     │
     ▼
Find original PaymentOrder by TxId
     │
     ▼
Verify return amount = original amount
  (or note partial return if different)
     │
     ▼
Post CREDIT to debtor's account
  (return of original debit)
     │
     ▼
Update payment status → RETURNED
     │
     ▼
Record return reason code
     │
     ▼
Generate camt.054 (CRDT) to customer
     │
     ▼
If original payment was on behalf of a customer's
pain.001, generate pain.002 update (RJCT or RTRN)
     │
     ▼
Close reconciliation record

Partial Returns

In some cases (e.g., charges deducted), the return amount may be less than the original:

<RtrdIntrBkSttlmAmt Ccy="AUD">985.00</RtrdIntrBkSttlmAmt>
<!-- Original was 1000.00 — 15.00 deducted as correspondent fee -->

<RtrdInstdAmt Ccy="AUD">1000.00</RtrdInstdAmt>
<!-- Original instructed amount preserved for reference -->

This is most common on SWIFT payments where intermediary banks have deducted charges, and ChrgBr = CRED.

Sample pacs.004 XML

<Document xmlns="urn:iso:std:iso:20022:tech:xsd:pacs.004.001.10">
  <PmtRtr>
    <GrpHdr>
      <MsgId>RTN-20240616-CBA-001</MsgId>
      <CreDtTm>2024-06-16T09:30:00</CreDtTm>
      <NbOfTxs>1</NbOfTxs>
      <TtlRtrdIntrBkSttlmAmt Ccy="AUD">2500.00</TtlRtrdIntrBkSttlmAmt>
      <IntrBkSttlmDt>2024-06-16</IntrBkSttlmDt>
      <SttlmInf>
        <SttlmMtd>CLRG</SttlmMtd>
      </SttlmInf>
    </GrpHdr>
    <TxInf>
      <RtrId>RTNID-20240616-001</RtrId>
      <OrgnlGrpInf>
        <OrgnlMsgId>PACS008-ANZ-20240615-001</OrgnlMsgId>
        <OrgnlMsgNmId>pacs.008.001.10</OrgnlMsgNmId>
      </OrgnlGrpInf>
      <OrgnlTxId>TX-UUID-001</OrgnlTxId>
      <OrgnlEndToEndId>E2E-CUST-REF-001</OrgnlEndToEndId>
      <RtrdIntrBkSttlmAmt Ccy="AUD">2500.00</RtrdIntrBkSttlmAmt>
      <RtrRsnInf>
        <Rsn><Cd>AC04</Cd></Rsn>
      </RtrRsnInf>
      <OrgnlTxRef>
        <Dbtr><Nm>Acme Corp</Nm></Dbtr>
        <DbtrAcct><Id><Othr><Id>111222333</Id></Othr></Id></DbtrAcct>
        <Cdtr><Nm>Jane Smith</Nm></Cdtr>
        <CdtrAcct><Id><Othr><Id>999888777</Id></Othr></Id></CdtrAcct>
      </OrgnlTxRef>
    </TxInf>
  </PmtRtr>
</Document>

Java Spring Notes

@Service
public class Pacs004ProcessingService {

    @Transactional
    public ReturnResult processReturn(PaymentReturnV10 pacs004) {
        for (var txInf : pacs004.getTxInf()) {
            // 1. Find original payment
            PaymentOrder original = paymentRepository
                .findByTxId(txInf.getOrgnlTxId())
                .orElseThrow(() -> new PaymentNotFoundException(
                    txInf.getOrgnlTxId()));

            // 2. Validate return amount
            BigDecimal returnAmt = txInf.getRtrdIntrBkSttlmAmt().getValue();
            BigDecimal origAmt   = original.getSettlementAmount();
            boolean isPartial    = returnAmt.compareTo(origAmt) < 0;

            // 3. Post credit to debtor account
            String creditRef = ledgerService.postCredit(
                original.getDebtorAccountId(),
                returnAmt,
                "RTN:" + txInf.getRtrRsnInf().get(0).getRsn().getCd().value()
            );

            // 4. Update original payment status
            original.setStatus(PaymentStatus.RETURNED);
            original.setReturnReasonCode(
                txInf.getRtrRsnInf().get(0).getRsn().getCd().value());
            original.setReturnDate(LocalDate.now());
            original.setReturnRef(txInf.getRtrId());
            if (isPartial) {
                original.setReturnedAmount(returnAmt);
                original.setShortfallAmount(origAmt.subtract(returnAmt));
            }
            paymentRepository.save(original);

            // 5. Notify customer via camt.054
            notificationService.sendReturnNotification(original, txInf);

            // 6. Reconciliation
            reconciliationService.matchReturn(original, pacs004);
        }
        return ReturnResult.success();
    }
}

pain.004 Clarification — Why pain.004 doesn't exist (common confusion)
pain.007 and pacs.007 — Payment reversal/recall (debtor-initiated)
camt.055 and camt.056 — Cancellation request that triggers a return
pacs.008 — The original payment message being returned
Payment Return — Accounting treatment of return
Inbound Payments — When a creditor bank initiates a return
Payment Exceptions — Returns as exception handling
Off-Us Transactions — Most interbank returns occur in off-us flows

Overview​

pacs.004 in Context​

Message Structure​

Return Reason Codes​

Account Issues​

Amount Issues​

Creditor-Initiated Returns​

Regulatory & Compliance​

Technical​

pacs.004 Return Flow​

Scenario: Creditor Account Closed​

Return Windows (Maximum Time Allowed)​

pacs.004 vs pacs.002 RJCT​

Receiving a pacs.004 — Debtor Bank Processing​

Partial Returns​

Sample pacs.004 XML​

Java Spring Notes​

Related Concepts​