Payment versus payment (PvP)
Definition:
A settlement mechanism that ensures that the final transfer of a payment in one currency occurs if and only if the final transfer of a payment in another currency or currencies takes place.
see Principles for financial market infrastructures
https://www.bis.org/cpmi/publ/d101.htm
Details:
PvP is in fact a cross-border cross-currency unitary operation. It is the base operation used in FX payment systems, when someone sends a payment in a diferent currency than the one supported by the receiver.
Depending on how the PvP payment fields are specified, the FX rate used to convert from one currency to another can be a fixed one or a variable one.
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.