Keeping Pace With the Global Shift in Payment Standards

Sep  17 
David Chance  Vice President of Product Strategy and Innovation, Enterprise Payments Solutions, Fiserv 

ISO 20022 presents challenges and opportunities for financial institutions and payment users

The migration to the new global messaging standard, ISO 20022, is posing challenges for financial institutions. With more than 70 market infrastructures across the world likely to move to the new standard by 2025, financial institutions are faced with evolving to keep pace.

Those that cannot send or receive ISO 20022 messages once the market infrastructures make the shift could miss out on opportunities and even lose business. For those willing to embrace the change, the benefits are significant.

ISO 20022 Facts

What is ISO 20022?

It's an international standard and a single, standardized approach to support all aspects of a financial interaction, including business models, messages and data elements.

Why is it important?

It provides a common language for financial interaction, ensuring a common understanding across multiple, dispersed, often unrelated parties, reducing risk and increasing automation.


It's important to understand the migration will not affect only financial institutions. All payments users, from retail customers to large corporates, will need to provide the new, structured information – names, addresses, payment purpose, etc. – required by market infrastructures and regulators. Payments, securities, cards and foreign exchange will be affected by the shift.

Increasing Awareness of ISO 20022 as a Global Payments Standard

Migration to the ISO 20022 messaging standard is no longer just a regional conversation. It is happening now in a phased manner. Target2 and Euro1/Step1 in Europe have announced November 2021 as their migration date, with the Federal Reserve and The Clearing House in the U.S. and CHAPS in the U.K. moving in 2022. Add to that list SWIFT, which is moving its correspondent banking messaging to ISO 20022 standards over a four-year period starting in November 2021, and it becomes clear there is a significant push.   

Delays are unlikely because regulatory authorities are holding firm to their rollout dates. Market infrastructures will make the change to accept only ISO 20022 messages, so financial institutions will need to be able to send and receive those messages to participate. 

ISO 20022 is the new data model for financial transactions and includes a set of semantics and message constructs that will transform the payments world. It is a global standard, which means payments professionals will need to learn a new language. Message types, file names and party names, for instance, will all change from the terminology operators in the various market infrastructures are used to.

Information Rich Data

From compliance-based transparency to the ability to hold and use information-rich data, the benefits and uses of ISO 20022 are many.

Some could argue the change is driven by regulators to support financial crime compliance because the structured information in the new messages enables more and better reporting. But viewing the move simply as another regulatory requirement would be overlooking an opportunity.

Extended and better-structured data will mean new use cases for financial institutions. The new standard uses common message components, and financial institutions could benefit from the interoperability that characteristic offers. Complex payments become simpler because data can be carried over different systems that use the same messaging standard. 

Moreover, the extended data in messages will mean organizations can do more with payments information, including developing new services for clients. When the information is available among various parties, the potential benefits include automating the reconciliation process for payments and remittances, reconciling invoices to shipment notes and tying those to the original orders, removing manual processes, and reducing costs and expensive exception processes.

Embrace All of the Benefits

If financial institutions focus only on the ISO 20022 messages that are required when interacting with their market infrastructure, then the benefits can be limited. ISO 20022 provides a wide range of messages that benefit the users of the payment systems, including request to pay, notification of receipt of funds and query messages.

The shift to ISO 20022-based messaging offers numerous opportunities, whether through real-time payments, high-value payments or as an enabler for cross-border payments.

The shift to ISO 20022-based messaging offers numerous opportunities, whether through real-time payments, high-value payments or as an enabler for cross-border payments. Providing support for those additional messages, along with support for electronic invoice presentment and payment systems, extends the reach of the financial institution into the entire value chain of the business interaction and turns the data into the most valuable of commodities – information. 

Interested in learning more? Visit us at stand X134 at Sibos 2019 to find out more about aligning your payment systems to ISO 20022.