What is MT101 file format and it’s application in SAP
MT101 message is a request to transfer fund from payer’s account to receiver’s. To make the transactions like this, MT101 message format is used to do the communication.
Below is the sample MT101 file format:
Why and where MT101 message type is used?
Well it can be understood if you look at the body of MT101 format. The body of SWIFT MT101 Message contains header, sender/ordering party details and customer/receiving party details. It means there will be blocks of each transaction in MT101 file and each transaction block will contain sender and receiver details.
Now let’s look at the other file formats, which body contains header, transaction details and footer. So these formats are specifically for sending payment from one bank to other receiver’s banks. But MT101 file is made for paying through multiple banks to many banks.
In easy words as mentioned above each transaction will have one sending bank and one receiving bank in MT101 format. So in single file there might be multiple sending banks and multiple receiving banks.
Hopefully now we understand use of MT101 message but now question arises is how a company/organization use this and how it can be helpful than other file formats?
To understand the answer of this question, We would like give you a scenario. Imagine a multinational company based in USA, who is spread across America having hundreds of company code and thousand bank accounts.
Now when in SAP you do the payment run from each bank account there should be a payment file configured for each bank. Imagine the efforts of having this much DME structures and payment files. It’s a huge activity of maintaining these file formats and matching the all requirements. This is where MT101 helps. With this you can use MT101 format for every bank. All the payment files from all banks will be created in MT101 format.And we know the structure of MT101 (header, sender details, receiver details). Now the trick here is, we don’t send MT101 directly to bank unlike in other file formats. Because we don’t know whether bank will understand MT101 or not.
So we send all the files to a middle man i.e. SWIFT which act as a middle-ware here and then SWIFT reads the MT101 and take call to which bank this file should go for payment. This is the reason in each transaction MT101 haves details of sending bank/company. This process is helpful to the organisations who use IHC (in house cash management). Who have worked on the IHC might be easily relate to this or find how useful is this.
Thanks for reading, if you want to learn more about bank payment files and DME in SAP then you can checkout this eBook.