Introduction
ISO 20022 is the new ISO standard. It was developed and is maintained by ISO/TC 68, the ISO technical committee responsible for standardisation in the field of banking and other financial services. It describes metadata and shares repository that contains descriptions of messages and business processes.
The standard covers financial information transferred between financial institutions, including payment transactions, trading securities and settlement information, credit and debit card transactions, and other financial information.
The repository contains a vast amount of financial services metadata that has been standardised across the industry. As of today, the following areas are covered:
- Account Management
- Administration
- Authorities
- Acceptor to Acquirer Card Transactions
- Card Administration
- ATM Management
- Fee collection
- File Management
- Fraud Reporting and Disposition
- Acquirer to Issuer Card Transactions
- Cash Management
- Network Management
- Sale to POI Card Transactions
- Settlement Reporting
- Terminal Management
- ATM Card Transactions
- Collateral Management
- Foreign Exchange Trade
- Business Application Header
- Payments Clearing and Settlement
- Payments Initiation
- Reference Data
- Payments Remittance Advice
- Securities Clearing
- Securities Events
- Securities Management
- Securities Settlement
- Securities Trade
- Trade Services Initiation
- Trade Services Management
- Trade Services
In other words, this standard creates a common language for payment data across the globe. There are about 300 standards for financial messages and transactions between financial institutions in the world currently, and about a dozen of them, such as SWIFT, SEPA, VISA and Mastercard are the most popular. Provided the new standard is accepted by the majority of participants in the financial world, it is expected that ISO 20022 should gradually replace other financial message standards.
ISO 20022 in Practice
It is planned that ISO 20022 will be widely used in the financial services industry from approximately March 2023. But compliance with this standard is not measured or enforced by a regulatory body: “There is no official certification authority for ISO 20022, and the implementation of ISO 20022 message definitions will depend a lot on the specific requirements of the community that is implementing.”
Since 2015, ISO 20022 has been introduced in various countries, but the percentage of financial institutions ready and willing to adopt it starts increasing now only.
Most financial institutions see the implementation of the common ISO 20022 standard as a technically complex process. For example, the ISO 8583 message, which is widely used in the card industry has length of 300 bytes on average, but under the new ISO 20022 standard it might be 4k-8k bytes. In general, there are enough difficulties and pitfalls.
The Bank of England and Pay.UK have established a Standards Advisory Panel to provide industry advice on the adoption of the new payment standards in the UK. The adoption process has 4 stages, the last one should be settled by Spring 2024.
Read more on official ISO20022 website: https://www.iso20022.org
