Credit Limit Check
Definition:
The process of verification if an account may be debited or credited in a settlement system.
Details:
If the amount to be debited in the payment message is equal or less than the balance on the sender’s correspondent account than the credit check limit passes.
If the amount to be credited in the payment message is equal or less than a credit limit imposed in the settlement system in general or on the receiving account in particular than the credit check limit passes.
Note that credit limit check can be linked also to bilateral limits between participants in the settlement system. In this case the credit limit check will verify if the liquidity transfer allowed by the bilateral limit is not exceeded.
Note:
This is a series of posts with definitions for the jargon used in #banking, #fintech and #payments.
Too many people use some terms without understanding them beyond the definition.
Too many “experts” use the terms but they never had experience with the actual implementation of anything in #banking, #fintech and #payments.