The Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) has revealed harmonised ISO 20022 data requirements that establish a consistent minimum set of messaging standards for more efficient processing of cross-border payments.
The CPMI developed the data requirements for ISO 20022 – the global open messaging standard for exchanging financial information – in collaboration with the private sector Payments Market Practice Group (PMPG) for use in cross-border payment transactions.
The data requirements, published in Harmonised ISO 20022 data requirements for enhancing cross-border payments – final report to the G20, will facilitate the straight through processing of end-to-end payments, making them faster and more reliable.
“These technical requirements will ensure that we are able to grasp the opportunities for more efficient cross-border payments afforded by richer and more structured international messaging standards,” said Sir Jon Cunliffe, chair of the CPMI and deputy governor for financial stability at the Bank of England.
“They are an excellent example of the type of practical impact the G20 programme can achieve, together with industry, to make cross-border payments faster, cheaper, more transparent and easier to access by 2027.”
“The increased adoption of ISO 20022 by payment systems around the world is a major opportunity to improve their interoperability,” BIS said in a statement. “But this opportunity will not be realised if jurisdictions implement the international messaging standard for payments in inconsistent ways. The CPMI's harmonised ISO 20022 data requirements address that risk and provide a common basis for use of the new messaging standard in cross-border payments.”
... the entire community stands to benefit in the long run from a convergence on these shared data practices
Michele Bullock, former co-chair of the CPMI messaging workstream, and governor of the Reserve Bank of Australia, said that implementation of these data requirements would require coordinated effort across the global payments community, “but the entire community stands to benefit in the long run from a convergence on these shared data practices”.
The report, however, warns there are continued harmonisation challenges around how the standard is adopted among individual jurisdictions. The report says: “While a global adoption of ISO 20022 is a very significant opportunity to improve cross-border payments, variability and inconsistency in the ways in which the standard is deployed and used in different jurisdictions and regions risks undermining its benefits.”
For example, the report highlights how many of the inefficiencies with cross-border payments faced by both the financial industry and its customers are caused by misaligned message flows and inconsistent data usage along the end-to-end payment chain. “Thus, while ISO 20022 provides a common base for a more interoperable exchange of cross-border payment messages, how the standard is used in practice could vary considerably, and frictions in the processing of cross-border payments could continue to persist even as ISO 20022 is adopted,” the report says.
Philip Smith is the editor of The Treasurer