What is the difference between cove and Inda and inga settlement methods in iso20022?

 COVE, INDA, and INGA are three of the four settlement methods available in ISO 20022, the new global standard for financial messaging. The fourth settlement method is CLRG, which is used for clearing and settlement through a clearing system.

COVE stands for covers . It is used when the instructing agent (IA) and the instructed agent (IB) do not have a direct account relationship. In this case, the IA sends a cover message to the IB, which contains the payment instructions and the settlement instructions. The IB then settles the payment with the IA using a third-party agent, such as a correspondent bank.

INDA stands for Instructing Agent . It is used when the IA has an account with the IB. In this case, the IA sends a payment message to the IB, which contains the payment instructions and the settlement instructions. The IB then debits the IA's account and credits the creditor's account.

INGA stands for Instructed Agents . It is used when the IB has an account with the IA. In this case, the IA sends a payment message to the IB, which contains the payment instructions and the settlement instructions. The IB then credits the creditor's account and debits its own account.

The following table summarizes the key differences between the three settlement methods:

Settlement method	When to use	Who settles the payment
COVE	When the IA and IB do not have a direct account relationship	A third-party agent, such as a correspondent bank
INDA	When the IA has an account with the IB	The IB
INGA	When the IB has an account with the IA	The IA

In general, INDA and INGA are the preferred settlement methods, as they are more efficient and less costly than COVE. However, COVE may be necessary in some cases, such as when the IA and IB are located in different countries and do not have a direct account relationship.