SWIFT Standards

Background:
SWIFT is a vital component to payment processing. Setting the standards through its MT message format, which is now migrating to the data rich ISO20022 message structure, many payment systems use SWIFT standards and/or SWIFT infrastructure to send financial messages between member Institutions. In payment terms this means that businesses will see their payment (and collection) instructions pass through one of more payment system using SWIFT standards. The migration to ISO20022 will allow the richer data to also pass-through domestic systems that support ISO20022. The most obvious use of SWIFT is for cross border payments, a common payment method that causes operational challenges to businesses in terms of payment certainty, currency and reconciliation, charges and FX costs can cause problems to a business.

Why is this important to businesses and corporates?
• Format & data – Businesses should consider how payments’ data can be passed from their Back office/ ERP through to their counterparty/ Beneficiary and to their own bank account entries to help reconciliation and STP (Straight Through Processing) for both parties. Their Banks/ PSPs can provide guidance on what data fields will be passed to the counterparty/ bank statement as the different payments systems migrate to ISO
• SWIFT payments are now mandated to use UETR (Unique Endtoend Transaction Reference) for every payment transaction sent, knowing this UETR can help businesses track payments
• To further enhance the tracking of payments, SWIFT introduced GPi (Global Payments Initiative) reference numbers, where Banks who adhere to the standards report progress of processing payments through updating information against the UETR. This is especially useful for payments being sent through multiple Banks.

Questions a business need to consider include:
• Are we using the data sent/ received in a payment message correctly?
• How will the ISO data standards help our reconciliation and interactions with suppliers and customers?
• Does our Bank/ PSP provide an easy way to use the UETR for SWIFT transactions?