Cover Payment

Correspondent settlement method, nostro banks.

Definition

In the cover method, the originating bank sends the instruction to the beneficiary's bank (MT103) and separately instructs the matching movement of funds to its correspondents (MT202COV). It contrasts with the serial method, where a single message hops from bank to bank. Cover is common when the two banks have no direct account relationship.

Origin

Described in the SWIFT User Handbook (Standards MT, Category 2) and in the Wolfsberg Group and Basel Committee principles on cover payment transparency.

Example in context

MT103 (customer instruction) → beneficiary's bank; in parallel, MT202COV (funds) → via nostro correspondents.

Related terms

• MT202COV — the message that carries the cover.
• Serial payment — the alternative method.