MT700 Field 71A and Its Relationship with UCP 600 Articles

Introduction

Field 71A of the SWIFT MT700 message specifies the charges — specifically, which party bears the bank charges associated with the documentary credit. The field uses three codes: OUR (charges borne by the applicant), BEN (charges borne by the beneficiary), and SHA (charges shared between the applicant and beneficiary). While field 71A appears to address a simple allocation of bank fees, its interaction with UCP 600 creates compliance obligations that affect document preparation, reimbursement claims, and discrepancy resolution.

This guide examines how field 71A operates within the UCP 600 framework, how the allocation of charges affects the beneficiary's documentary obligations, and where misalignments between field 71A and the credit's other terms produce discrepancies.

Failure Mode Analysis

Failure Mode 1: Field 71A Specifies BEN But Beneficiary Does Not Show Charge Deduction

When field 71A reads "BEN" (beneficiary bears charges), the beneficiary's bank deducts charges from the reimbursement amount. If the commercial invoice does not show the deduction, or if the beneficiary claims the full credit amount, the examining bank may flag the discrepancy. The charge allocation in field 71A creates an expectation about how the reimbursement amount is calculated.

Failure Mode 2: Field 71A Specifies OUR But Beneficiary's Bank Deducts Charges

When field 71A reads "OUR" (applicant bears charges), the beneficiary's bank should not deduct charges from the reimbursement. If the bank deducts charges despite the OUR designation, the beneficiary receives less than the credit amount. The discrepancy may be in the bank's processing, but the beneficiary bears the commercial impact.

Failure Mode 3: Field 71A Specifies SHA But Allocation Is Undefined

When field 71A reads "SHA" (charges shared), the allocation between applicant and beneficiary is not precisely defined. The beneficiary's bank deducts its charges, and the issuing bank deducts its charges, but the split between the two parties is not specified. This creates ambiguity about whether the beneficiary's presentation complies with the credit's charge terms.

Failure Mode 4: Field 71A Conflicts With Credit Text Charge Clause

Some credits contain an explicit charge clause in the credit text that specifies a different allocation than field 71A. For example, field 71A reads "SHA" but the credit text states "all charges outside the country of issuance are for the beneficiary's account." The conflict between the SWIFT field and the credit text creates confusion about the applicable charge allocation.

Failure Mode 5: Field 71A Does Not Address Non-Bank Charges

Field 71A addresses bank charges specifically. It does not address non-bank charges — such as courier fees, insurance premiums, or government inspection fees — unless the credit explicitly includes them. The beneficiary may assume field 71A covers all charges, but the field's scope is limited to bank charges.

Deterministic Resolution Architecture

Step 1: Extract and Interpret Field 71A

Read field 71A from the SWIFT MT700 message. Record the code (OUR, BEN, or SHA) and its implication for charge allocation. OUR means the applicant bears all bank charges. BEN means the beneficiary bears all bank charges. SHA means charges are shared.

Step 2: Map Field 71A to Each Bank in the Transaction Chain

Identify every bank that charges fees: the issuing bank, the nominated bank, the advising bank, and any confirming bank. For each bank, determine which party (applicant or beneficiary) bears the charge based on field 71A. This mapping establishes the financial obligation for each charge.

Step 3: Determine Whether the Invoice Must Show Charges

If field 71A specifies BEN, determine whether the credit requires the invoice to show the charge deduction. Article 37(c) states that the invoice need not show charges unless the credit requires it. If the credit does not require the invoice to show charges, the beneficiary presents the full credit amount on the invoice and the bank handles the deduction in the reimbursement process.

Step 4: Reconcile Field 71A Against the Credit Text

If the credit text contains a charge clause that differs from field 71A, resolve the conflict before document preparation. The SWIFT message typically governs, but the credit text may contain more specific instructions. Request clarification from the issuing bank if the conflict is material.

Step 5: Verify Reimbursement Amount Against Field 71A

Calculate the expected reimbursement amount based on field 71A. If field 71A specifies OUR, the beneficiary should receive the full credit amount. If field 71A specifies BEN, the beneficiary's bank deducts charges before remitting. If field 71A specifies SHA, the deduction is shared. Verify the calculation before presenting documents.

Step 6: Address Non-Bank Charges Separately

Identify any non-bank charges (courier, insurance, inspection) and determine which party bears them under the credit's terms. These charges are outside field 71A's scope. If the credit does not address non-bank charges, the default allocation follows the Incoterms or the parties' contract.

Step 7: Confirm Field 71A Compliance in the Presentation Package

Before submission, verify that: (a) the invoice amount reflects the credit amount, (b) any charge deductions comply with field 71A, (c) the reimbursement claim matches the field 71A allocation, and (d) no charge discrepancies exist between the SWIFT message and the credit text.

Step 8: Document the Charge Allocation Audit

Record the field 71A analysis, the charge mapping, the invoice verification, and the reimbursement calculation. This documentation serves as an internal compliance record and provides a reference for discrepancy resolution if the examining bank flags a charge-related issue.

Conclusion

Field 71A of the SWIFT MT700 message allocates bank charges between the applicant and the beneficiary. While the field appears simple — three codes, three allocations — its interaction with UCP 600 articles on invoice presentation (Article 37(c)), document examination (Article 14(b)), and refusal (Article 16) creates compliance obligations that extend beyond a simple fee calculation. The beneficiary must understand field 71A's allocation, map it to each bank's charges, and verify that the reimbursement amount and invoice comply with the designated allocation.

The resolution architecture treats field 71A as a financial parameter that must be integrated into the document preparation process. By extracting the code, mapping it to the transaction's bank chain, reconciling it against the credit text, and verifying the reimbursement calculation, the beneficiary eliminates charge-related discrepancies that arise from misinterpretation or misapplication of field 71A.

FAQ

Q1: Does field 71A cover all charges or only bank charges?
Field 71A covers bank charges only — the fees charged by the issuing bank, nominated bank, advising bank, and confirming bank. Non-bank charges such as courier fees, insurance premiums, and government inspection fees are outside field 71A's scope unless the credit explicitly includes them.

Q2: What is the difference between BEN and SHA?
Under BEN, the beneficiary bears all bank charges — the beneficiary's bank deducts its charges, and the issuing bank deducts its charges, all from the beneficiary's reimbursement. Under SHA, charges are shared: each party bears the charges of its own bank. The exact split under SHA varies by banking practice.

Q3: Must the invoice show the charge deduction when field 71A specifies BEN?
Not necessarily. Article 37(c) states that the invoice need not show charges or deductions unless the credit requires it. If the credit does not require the invoice to show charges, the beneficiary presents the full credit amount and the bank handles the deduction in the reimbursement process.

Q4: What happens if field 71A conflicts with the credit text?
Conflicts between field 71A and the credit text should be resolved before document preparation. The SWIFT message typically governs, but the credit text may contain more specific instructions. The beneficiary should request clarification from the issuing bank through the advising bank.

Q5: Can field 71A be amended after issuance?
Field 71A can be amended only through a formal credit amendment issued by the issuing bank and advised through the advising bank. A verbal or informal change to the charge allocation is not binding.

Q6: How does field 71A interact with confirming bank charges?
If the credit is confirmed, the confirming bank charges are subject to field 71A. If field 71A specifies OUR, the confirming bank's charges are borne by the applicant. If BEN, the beneficiary bears the confirming bank's charges. The beneficiary should confirm the confirming bank's charge policy before agreeing to the credit terms.

Source Notes

Context only: The source dossier for this guide referenced ICC publications on eUCP v2.1 and SWIFT MT700 field specifications. No text from those sources has been reproduced. This guide was composed from first principles using the UCP 600 text, ISBP 745, eUCP v2.1, SWIFT MT700 field 71A specifications, and the author's independent analysis of charge allocation in documentary credit transactions.