The use of different financial messaging standards creates problems in automating payments from end to end. ISO 20022 is solving this challenge through a globally accepted standard that improves payment efficiency while reducing risk.
High-value payment systems in more than 70 countries already use the ISO 20022 MX format. By 2025, MX will be the global standard for financial messaging, replacing propriety formats used by payment systems such as Swift, CHIPS, and Fedwire Funds.
We are a key player in shaping the financial industry’s transition to ISO 20022. By leveraging this global standard, we will provide our customers with an optimal payment experience based on their needs.
ISO 20022 is a strategic industry initiative to replace proprietary message formats with a standard format and definition of data elements. This can improve payment processing efficiency and interoperability among payment systems around the world.
What makes ISO 20022 special is its use of Extensible Markup Language (XML), which provides a common language for systems and people to exchange information about financial business. ISO 20022 uses common message components that are reusable in other message formats, enabling payment systems to customize data elements to meet their unique needs.
Data-rich payment messages are more likely to post automatically, potentially reducing manual touchpoints for faster reconciliation, increased straight-through processing, and reduced risk of fraud. Potential benefits include the following:
Financial infrastructures worldwide must adopt ISO 20022 payments by 2025. Payment systems are moving to the standard on different schedules, beginning in March 2023.
| Payment system | Transition date |
|---|---|
| Swift, Europe Target 2 | Starting March 2023. Swift MT and ISO 20022 MX messages will coexist until 2025. Originators can send most payment messages in either format. |
| CHAPS | June 2023 (complete). All payment messages must now use the ISO 20022 MX format. |
| CHIPS | April 2024 (complete). All payment messages must now use the CHIPS ISO format. |
| Fedwire Funds | March 2025. All payment messages must use the Fed ISO format starting in March 2025. |
Swift MT messages can no longer keep up with financial industry and business requirements. ISO 20022 MX messages will replace Swift MT messages starting in 2023. Some of the message types in the initial transition include the following:
| Message type | Swift MT | ISO 20022 MX |
|---|---|---|
| Payment initiation | MT 101 series | pain.001 |
| Payment clearing and settlement | MT 103, 200, 202, 202 COV, and 203 series | pacs.008, pacs.009, and pacs.009 COV |
| Cash management | MT 900/910 series | camt.054 |
| Cash management | MT 940/950 series | camt.053 |
We are a founding member of Swift’s Payments Market Practice Group (PMPG). We’re also an active participant in key working groups that are shaping the transition, including HVPS+, CBPR+, IP+, and various technical user groups. We’re participating in the pilot testing program for Swift Transaction Manager and have started community testing with other banks.
To help ensure we’re well-prepared to support our customers, we plan to transition from MT to MX messages in phases.
| Message type | Transition plan |
|---|---|
| Payment messages customers send to us | Customers can continue to send most payment messages to us in either MT or MX format. Exception: We can only accept Request for Transfer messages in MT format (MT101) for now. Customers should be able to send them in the MX pain.001 format starting in June 2024. |
| Payment messages we send to other financial institutions through Swift | All outgoing payments through Swift will fully transition to MX in 2025. |
| Statement and advice messages we send to customers |
|
| Charge payment notifications and requests |
|
We encourage customers to start planning now so they’re ready when the payment systems they use complete their transition to the MX format.
RO-4040109
LRC-1124
