What is ISO 20022? The new payments messaging standard
"The biggest change to payments messaging in a generation"
Bank of England
ISO 20022 is the new global payments messaging standard. This globally agreed methodology standardises how businesses interact, process and settle comprehensive payments details.
In the UK, these changes, which SWIFT, the Bank of England and Pay.UK are driving, will be mandatory for all firms exchanging payments information by spring 2023. Further afield, the European Central Bank, the Real-Time Payments Group and P27 are all driving international best practice and interoperability by adopting the standard.
What's changing and why?
Today, major payment systems are held back by the sheer variety of payments messages available – from CHAPS and Faster Payments to the well-known BACs – all operating in their own language. This causes a fragmented, limited, and unharmonised system. ISO 20022 corrects this by providing a common language and model for payments data, and the benefits are clear:
- Global adoption: by 2023, 87 per cent of the world’s financial transactions will be through ISO 20022 and over 70 countries are already using it
- Central backing: this change to payments infrastructure is being supported by the Bank of England’s Real Time Gross Settlement system, which underpins CHAPS and Pay.UK’s New Payments Architecture
- Cross-sector impact: ISO 20022 will affect all firms involved in payments factory, cash management and payments acquiring
- By creating a common language and model for payments data, ISO 20022 significantly improves the quality of data across the payments ecosystem. Richer, structured, meaningful data will enable new client experiences, while improving compliance and efficiency.
ISO 20022 will also reduce the friction in cross-border payments, cut the need for intervention and repairs, and help trace payments, all of which is great news for KYC (Know Your Customer), AML (Anti-money laundering) and sanctions screening.
Where are you on your journey? Use our Readiness Assessment Tool to help you gauge where you're at.