ISO20022

Background:
ISO20022 is "A single standardisation approach (methodology, process, repository) to be used by all financial standards initiatives". For the payments industry this focuses on the use of a rich data standard for the exchange of financial messages - primarily for bank to bank (pacs) messages as well as client to Bank (pain) initiation messages and cash reporting (camt) messages. Associated standards are defined for remittance advices (remt), and the new Request To Pay (reda). Whilst these message standards have existed, and been developed over a number of years, a deep understanding is now vital for all involved in the payment value chain, as SWIFT migrates from its legacy format (MT messages) to ISO20022. In the UK, this is not just about SWIFT messages, as the UK payment schemes historically utilise message formats that are very limited in usefulness. Whilst CHAPS currently uses SWIFT's MT message type, the Bank of England is undertaking a major programme to renew the RTGS service including adopting the ISO 20022 messaging standard for CHAPS payments. The retail schemes use old formats (BACS 18 & ISO8583) that are very limited in data that can be used for reconciliation and payments transparency. Continental Europe has used the ISO message standard for SEPA for a number of years, although there is a migration planned for 2023 from the earlier version to the latest version of the standard. Worldwide adoption of IS020022 (2019) is increasing but still some way off from being truly global usage.

Why is this important to businesses and corporates?
• For most payment schemes the mandatory nature of the move to ISO20022 is in bank-to-bank messages. This means business use of the message type will be inconsistent and reliant on services offered by Banks in terms of what reporting options contain which data elements for receivables and what payment formats are offered to business and corporates to initiate transactions.

Questions a business need to consider include:
• How important is the data that can now be included in a payment message to a business initiating payments and ones receiving payments? Does it help the order and pay process for buyer and seller become more efficient by allowing immediate reconciliation?
• How ready are the systems used to consume to initiate payment messages in ISO20022?
• For businesses who are multi banked how can the software providers help with multi bank connectivity?
• Do you know the different ISO message types, including rejections, returns - these are new services for many payment scheme's?
• When will your Bank/s encourage you to adapt ISO and what are their current and planned services?