ISO 20022 harmonisation requirements for enhancing cross-border payments

The CPMI has released a consultative report proposing 15 requirements for harmonised use of ISO 20022 for cross-border payments.
The CPMI has proposed requirements for the harmonized use of ISO 20022 for cross-border payments. The adoption of ISO 20022 as a common messaging standard presents an opportunity to improve cross-border payments, but its varying deployment globally could undermine its benefits.
The present CPMI report outlines the proposed harmonization requirements, which are open for public consultation. These requirements aim to provide guidance for consistent usage of ISO 20022, aligned with the G20 targets for faster and more transparent cross-border payments. The CPMI and industry stakeholders have collaborated to develop these requirements, considering factors like critical measures, neutrality, and the future state after the coexistence period between SWIFT MT and ISO 20022 ends. Broad adoption of the requirements is crucial to avoid further fragmentation. The proposed introduction of the requirements aligns with SWIFT’s decision, and an inclusive consultation process is essential for broad buy-in.
Recommendation #1 suggests using the appropriate message for a particular business function. Questions 2-4 ask if this requirement is adequate, how to mitigate risks, and the level of effort required for implementation.
Recommendation #2 recommends using ISO 20022 externalized codes for payments and payment-related processes. Question 5 asks if this would facilitate faster, cheaper, and more transparent cross-border payments, while question 6 asks about limitations and challenges resulting from increased reliance on ISO 20022 codes.
Recommendation #3 suggests indicating that a payment is a cross-border payment to enhance processing efficiency and compliance procedures. Questions 7-9 ask about the effectiveness of using an ISO 20022 external code, the level of effort required for implementation, and the impact on compliance procedures.
Recommendation #4 recommends supporting/restricting the character set used for ISO 20022 payment messages to current market practice. Question 10 asks if the restricted character set is adequate and if any additional characters should be included.
Recommendation #5 suggests using a common time convention across all ISO 20022 messages associated with cross-border payments. Question 11 asks if requiring times in ISO 20022 messages to be stated in UTC or local time with UTC offset will enhance transparency and efficiency.
Recommendation #6 recommends including a unique end-to-end reference for all cross-border payments. Question 12 asks if requiring the use of UETR for all cross-border payments will have a positive impact on transparency, speed, and cost.
Recommendation #7 suggests ensuring full transparency on processing times for cross-border payments. Question 14 asks if the requirement for inclusion of the time of debit of the debtor will increase transparency on the time it takes to complete the processing of cross-border payments.
Recommendation #8 recommends ensuring full transparency on amounts, currency conversions, and charges of cross-border payments. Questions 16-17 ask about the implications of requiring complete information and any technical, legal, or other hurdles that could impede inclusion.
Recommendation #9 suggests indicating that a cross-border payment is consistent with the CPMI service level agreement guidance. Questions 18-20 ask about the impact on cross-border payment processing, financial institutions‘ business models/strategies, and the level of effort required for implementation.
Recommendation #10 recommends using unique account numbers (or proxies) to the extent possible. Question 21 asks if this would have a positive impact on the speed and cost of cross-border payments.
Recommendation #11 suggests uniquely identifying all financial institutions involved in cross-border payments in an internationally recognized and standardized way. Questions 22-24 ask about the effectiveness of using the BIC to identify financial institutions, the level of effort required for implementation, and the impact on financial institutions that currently do not have a BIC.
Recommendation #12 recommends identifying all entities involved in a cross-border payment in a standardized and structured way. Questions 25-26 ask about the effectiveness of requiring participants to identify all entities involved and the use of structured identifiers such as the LEI.
Recommendation #13 suggests identifying all persons involved in a cross-border payment in a standardized and structured way. Question 27 asks about the effectiveness of requiring participants to identify all persons involved.
Recommendation #14 recommends providing a common minimum level of postal address information structured to the extent possible. Questions 28-29 ask about the effectiveness of requiring structured postal address information and the minimum required postal address information.
Recommendation #15 suggests catering for the transport of customer remittance information across the end-to-end cross-border payment chain. Question 30 asks if setting minimum end-to-end expectations with respect to the carrying of remittance information can improve processing efficiency, while question 31 asks about the obstacles to including reference to separately sent remittance information.
After finalization in mid-2023, payment system operators and participants should align their ISO 20022 usage guidelines with the CPMI’s requirements by November 2025.
Please submit any comments regarding the ISO 20022 harmonisation to the CPMI secretariat (cpmi@bis.org) before the extended deadline of 31 May 2023. Please include „ISO 20022 harmonisation“ in the subject line of your email. All responses received will be shared with the JTF and will be used to develop the finalised harmonisation requirements, which will be published by the CPMI later this year. It is important to note that all submitted responses will also be made available on the CPMI website. We kindly request that you refrain from including any commercial or sensitive information** in your submissions. If necessary, please clearly indicate any redactions that should be made before publication.