Payment reference number (PRN)

Definition

A payment reference number (PRN) is a unique identifier assigned to a specific payment transaction to facilitate accurate and efficient processing by banks and financial institutions.

What is a payment reference number?

The primary purpose of a payment reference number is to ensure that payments are correctly allocated to the intended recipient or account. It serves as a reference or identifier that links the payment to a specific invoice, bill, or transaction.

PRNs are typically generated by the entity or organisation requesting payment. They may be generated electronically through billing or invoicing systems or manually assigned by the payer when making a payment.

These numbers are alphanumeric codes consisting of a combination of letters, numbers, or special characters. They are designed to be unique to each payment transaction, helping to prevent duplication or confusion. Banks and financial institutions use PRNs to match incoming payments with the relevant recipient accounts or invoices. PRNs are included in electronic payment messages and bank records.

PRNs streamline the payment process for both parties involved, reducing the risk of errors, delays, and misallocations. They improve transparency and accountability in financial transactions by providing a clear reference point for auditing and reconciliation purposes. PRNs also facilitate efficient communication and coordination between payers and recipients, particularly in cases where multiple payments need to be reconciled against specific accounts or invoices.

Example of payment reference number

John Smith is making a payment of $500 to his utility company for his monthly electricity bill. The utility company provides him with a payment reference number. The payment reference number assigned to John’s payment is “ELEC2023-05-123456789.” John includes this reference number when making the payment online or through his bank’s mobile app. This ensures that the utility company can easily identify and allocate John’s payment to his electricity account.