Becoming a SEPA Indirect participant though a sponsor bank brings a Payment Service Provider closer to the Europe Clearing and Settlement Mechanisms. While being SEPA indirect participan is a massive undertaking (usually part of a broader core banking build initiative), it does bring additional payment agility and control.

In addition to regular SEPA payment flows, SEPA indirect and direct participants have access to and must be able to support additional payment flows. These flows are known as related transactions or R transactions.

A SEPA indirect or direct participant must be able to return a SEPA credit transfer that was previously received or a SEPA direct debit that was previously sent. Similarly, they must be able to receive a return related to a SEPA credit transfer previously sent or a SEPA direct debit previously debited. A return can be proactive or be sent in response to a return request, also called a recall.

A return includes a reason code that explains the cause of the return. Common reason codes include AC01 for an incorrect account number, AC06 for a blocked bank account, and AM04 for insufficient funds. A return sent in response to a return request always has FOCR (for “following cancellation request”) as a reason code.

A SEPA direct or indirect participant must also be able to recall a SEPA credit transfer that was previously sent or a SEPA direct debit core that was previously debited. Similarly, they must be able to answer a recall received from another SEPA direct or indirect participant.

The recall includes a reference to the corresponding payment as well as a reason code. The three reason codes authorised for recalls are DUPL for a duplicate payment, TECH for a technical error, and FRAD for a fraudulent payment.

When receiving a recall, a SEPA direct or indirect participant can either answer positively, returning FOCR as a reason code, or negatively, with reason codes including LEGL for legal reasons, NOOR if no original payment was sent or received, or ARDT if the payment had already been returned.

Not answering a recall can result in an inquiry message. This message is a reminder of a recall which has remained unanswered. SEPA direct and indirect participants are expected to accept or deny the inquiry by responding to the related recall.

When sending R transactions, SEPA indirect or direct participants are expected to use standard reason codes. Just like SEPA messages, SEPA reason codes rely on ISO standards and use ISO external codes.