What is an payment order execution? Procedures for executing payment orders in Vietnam

What is an payment order execution? Procedures for executing payment orders in Vietnam (Internet image)

1. What is an payment order execution?

According to Clause 3, Article 3 of Circular 46/2014/TT-NHNN, payment order execution means a bank transferring a certain sum of money from the paying party’s checking account to the beneficiary at the request of the sender.

The sender and the beneficiary may be the same person.

2. Contents ofa payment order in Vietnam

Clause 1, Article 8 of Circular 46/2014/TT-NHNN stipulates that a payment order contains at least:

- The text “lệnh chi” (“payment order” (or payment order) and order number;

- Date of payment order;

- Name, address and checking account number of the sender;

- Name of the sender’s bank;

- Name, address and checking account number of the beneficiary;

- Name of the beneficiary’s bank;

- Details of payment;

- Amount in words and figures;

- Date of the valid payment order;

- Signature (handwritten signature in case of physical document and electronic signature in case of electronic document of the account holder or the person authorized by the account holder and signatures of the persons related to the document; seal of the unit (if any).

The bank may specify other contents in the payment order in accordance with its management requirements and operations, and regulations of law.

3. Procedures for executing payment orders in Vietnam

Pursuant to Clause 2, Article 8 of Circular 46/2014/TT-NHNN, the bank shall establish and issue internal procedures for executing payment orders in a quick, accurate and safe manner and all of the following steps shall be taken:

(1) Payment order preparation and delivery

The sender shall prepare and send a payment order to the sender’s bank (where the checking account is opened) to request it to transfer a certain sum of money from the checking account to the beneficiary. The bank shall instruct clients to prepare and adopt methods of delivering payment order at the bank in accordance with regulations of this Circular and applicable regulations of the State Bank.

(2) Payment order verification

Upon receipt of the payment order, the bank shall verify its legitimacy. To be specific:

- Regarding the physical order, it shall be strictly verified in accordance with the State Bank's regulations on bank accounting documents, shall be prepared using the right form and have a sufficient number of copies for accounting and retention. The contents of the order shall be specified in an adequate, clear and accurate manner. The contents of its copies must be matched with other and such copies must bear all signatures and seals (if any) of the client and the bank. The client’s signature and seal (if any) specified in the order must match with the form registered at the bank where the account is opened.

- Regarding the electronic order, the bank must verify contents and technical information of the order (electronic signature and validity of the data originator, data format, order code, etc.) in accordance with regulations on electronic documents.

- The bank must check checking account balance and solvency of the sender.

If the payment order is invalid or solvency is not assured, the bank shall request the sender to adjust it or return it to the sender.

(3) Payment order processing and accounting

- At the sender’s bank:

After verification, if the payment order is valid and solvency is assured, the sender’s bank shall proceed as follows:

+ If the beneficiary and the sender have their checking account at the same bank, within 01 working day from the date on which the client’s payment order is received (unless otherwise agreed), the bank shall debit the sender’s checking account and credit the beneficiary’s checking account, and then send a Debit Note to the sender, and a Credit Note to the beneficiary.

+ If the beneficiary does not have a checking account at the sender’s bank, within 01 working day from the date on which the client’s payment order is received (unless otherwise agreed), the bank shall debit the sender's checking account, and then send a Debit Note to the sender, and prepare and send a payment order to the beneficiary’s bank by using an appropriate payment system.

- At the beneficiary’s bank:

After receiving the payment order sent by the sender’s bank, the beneficiary’s bank shall verify it and proceed as follows:

+ If the payment order is valid, within 01 working day from the date on which the payment order is received, the beneficiary’s bank shall credit the beneficiary’s checking account, and then send a Credit Note to the beneficiary.

+ If the payment order contains error, within 01 working day from the date on which the payment order is received, the beneficiary’s bank shall request the sender’s bank to trace it or return it to the sender’s bank.  + Upon receipt of the written response to tracing request, within 01 working day, the beneficiary’s bank shall execute or return the payment order to the sender’s bank.

+ If the beneficiary’s account is closed, within 01 working day from the date on which the payment order is received, the beneficiary’s bank shall return the payment order to the sender’s bank.

- In case the beneficiary does not have a checking account at the bank:

After receipt of the payment order, within 01 working day, the bank shall verify it, credit the beneficiary’s appropriate account and inform the beneficiary. In the case where the beneficiary receives cash:

+ If the beneficiary that is an individual shall, upon receipt of cash, present his/her valid ID or passport or other lawful documents (below collectively referred to as “identity documents”).

++ In case the recipient that is an authorized person shall, in addition to the aforementioned documents, present a power of attorney in accordance with regulations of law.

++ If the beneficiary is an organization, the representative of such organization shall, upon receipt of cash, present proof of his/her representative capacity besides identity documents.

+ Within 15 days since receipt of the payment order, when informed by the bank, if the beneficiary does not show up to receive cash or the bank fails to contact the beneficiary, the bank must prepare and send a refund order to the sender’s bank.

(4) Banks making debit and credit statements

The bank shall sufficiently and promptly send the Debit Note or Credit Note to the client in accordance with the agreement between the bank and the client and regulations of law.

Van Trong

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