Reshaping Global Payments: ISO 20022

The transition to ISO 20022, the global standard for electronic data exchange, is set to transform cross-border payments by November 2025. 
 
It promises enhanced interoperability, faster processing times, richer data, improved accuracy, reduced maintenance costs, and lower fraud risks. However, for many institutions, the migration process remains complex.

ISO 20022 introduces many new data fields for the transmission of payments, some mandatory and many optional, opening new possibilities for anyone involved in payments today.

To ensure compliance, institutions should adopt key measures outlined by:

# Adopt Official Definitions: Banks must base their implementation on ISO 20022’s official message definitions, available in the Catalogue of Messages, and participate in Standards Evaluation Groups to justify and implement necessary changes.

# Use Valid Message Instances: Adhering to XML schema definitions ensures formatting consistency, with subset schemas enabling customized compliance testing.

# Understand Constraints: Compliance requires alignment with ISO 20022 Message Definition Reports and Message Usage Guides, which outline specific rules and guidelines.

# Follow Registered Code Values: Internal and external code sets in ISO 20022 must be used as per the XML schema and external code set documentation, which are updated quarterly.

# Know Business Application Header Requirements: While not mandatory, Business Application Header can simplify processing by encapsulating key information in a separate structure, depending on the business domain.

# Manage Supplementary Data Extensions: This field allows additional information within strict guidelines authorized by Standards Evaluation Groups.
To maximize readiness, banks should participate in industry testing, ensure processes meet sanctions and AML controls, enrich customer data, and train staff in the new standard. 

By adhering to these guidelines, institutions can confidently modernize their payment systems and fully harness the benefits of ISO 20022 for global payments.