Payment Order Debits vs Credits

A summary of how Payment Order directions are determined in Modern Treasury.

Payment Orders vs. Transactions

Payment OrderTransaction
DebitCharge a counterparty (pull funds)Decrease in account balance
CreditPay a counterparty (push funds)Increase in account balance

Payment Orders: Debits and Credits

The direction attribute (credit or debit) of a Payment Order refers to the direction of activity in the External Account (i.e. the Counterparty bank account).

A credit Payment Order will appear as a credit to the External Account. Similarly, a debit Payment Order will appear as debit to the External Account.

Transactions: Debits and Credits

The direction attribute (credit or debit) of a Transaction refers to the direction of money movement in your Internal Account.

This relationship means that a credit Payment Order (push funds) will result in a debit transaction (decrease balance) in the Internal Account. Conversely, a debit Payment Order (pull funds) will result in a credit transaction (increase balance) in the Internal Account.