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.
Real-time payment networks (such as The Clearing House’s RTP network) and 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.
Understanding the ISO 20022 transition
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 will post automatically, eliminating manual touchpoints for faster reconciliation, increased straight-through processing, and reduced risk of fraud. Potential benefits include the following:
- Increased payment efficiency and automation. Payments move seamlessly through domestic and cross-border payment systems.
- Reduced costs and potential risk. The standard format enables automated file posting, eliminating manual entry and intervention.
- Enhanced customer experience. Data-rich payments provide consistent, detailed transaction information. MX messages can contain up to 10,000 KB of transaction information, compared with 100 KB for messages today.
- Improved compliance. The common language reduces false positives during sanctions screening.
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 mid-2025. Originators can send most payment messages in either format. |
CHAPS
| April 2023. All payment messages must use the ISO 20022 MX format starting in April 2023. |
CHIPS
| November 2023. All payment messages must use the ISO 20022 MX format starting in November 2023. |
Fedwire Funds
| March 2025. All payment messages must use the ISO 20022 MX format starting in March 2025. |
SWIFT MT message transition
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 |
What we are doing to prepare
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 | Starting in March 2023, customers can send most payment messages to us in either MT or MX format. Exceptions. We can only accept the following messages in MT format for now: - Request for transfer (MT101). Customers should not send pain.001 MX messages to us.
- Financial markets direct debit (MT204). Customers should not send pacs.010 MX messages to us.
|
Payment messages we send to customers | - From March 2023 to mid-2023, we’ll send payment messages in MT format.
- Starting in mid-2023, we’ll send more payment messages in MX format until we fully transition to MX in 2025. In most cases, we’ll send messages in the same format we receive them.
|
Statement and advice messages we send to customers | Until mid-2023, we’ll send most statement and advice messages in MT format through SWIFT FIN. Exception: Cash management messages sent through FileAct transmission. If customers currently receive these messages in MX format, they will continue to receive them in MX format. Starting in mid-2023, we will offer the option to receive statements and advice messages in MX format through SWIFT FIN+. |
We encourage customers to start planning now so they’re ready to send MX messages when the payment systems they use complete their transition to the new format.
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