Payment industry experts from Africa and across the world have joined forces with SWIFT to step up the drive to move cross-border transactions to the ISO 20022 standard.
First published in 2004, ISO 20022 is a methodology, or recipe, which can be followed when creating financial messaging standards. It supports rich data structures, thereby enabling increased data transparency and interoperability. The success of ISO 20022 amongst market infrastructures around the world has led to increasing community demand for cross-border usage, an area where the SWIFT MT is the dominant standard today.
In light of multiple planned migrations to ISO 20022 by high-value and instant payments infrastructures, the SWIFT community has agreed to create a common end-to-end implementation that will deliver increased efficiencies, facilitate improved regulatory compliance, enhance the party identification process and enable new business opportunities.
SWIFT convened the first Cross-Border Payments and Reporting Plus (CBPR+) group – a working group of international payments experts that will formulate global Market Practice and Implementation Guidelines for the common rollout and implementation of ISO 20022 for cross-border payments.
The guidelines drafted by the group will lay the cornerstone for a successful migration of cross-border payments traffic to ISO 20022 beginning in November 2021. A standardised global approach will lower the implementation cost for the industry as a whole. A four-year coexistence period will allow all members of the SWIFT community to make the switch by the end of 2025. SWIFT will provide a service to translate between ISO 20022 and the MT messaging standard to assist the community with the transition.
SWIFT will also provide testing environments for institutions to ensure implementation conforms to the CBPR+ guidelines, and to test the translation facility.
South Africa has been a front runner in ISO adoption across the African continent. In 1999, South African Central Securities Depository Strate became one of the first securities market infrastructures to use ISO 15022 and now plans to move to ISO 20022. The South African Reserve Bank is also planning to migrate its Real Time Gross Settlement System for payments to ISO 20022 in the coming years. A new South African payments system currently under development by the Payments Association of South Africa will also use ISO 20022 as its messaging standard.
South Africa has also been significantly involved in the establishment of a set of ISO 20022 market practice guidelines for high-value payments systems (HVPS) through its participation in SWIFT’s HVPS+ task force. The task force aims to establish a common foundation on which major financial market infrastructures can build their community implementations, while supporting global interoperability.
Sean Mouton, Chief Technology Manager ABSA, said: “The migration to ISO 20022 is a huge step forward for the global payments system. It will provide a rich common data model for cross-border or domestic payments and lead to better customer services, more accurate compliance processes and better straight through processes, thereby benefiting banks, market infrastructures and corporates alike.”
Denis Kruger, Head of Sub-Sahara Africa, SWIFT, said: “Payment market infrastructures around the world are embracing the benefits of ISO 20022 and planning their migration to the new standard. This migration will impact banks across Africa. SWIFT is committed to supporting the financial community reach this goal with a harmonised approach, and driving the move moving towards a more efficient and interoperable global payment systems.”
Harry Newman, Head of Banking at SWIFT, said: “Our mission is to standardise business and operational interaction as much as possible, rendering a seamless service that banks can offer competitively to their clients. The benefits of the common rulebook within SWIFT gpi show how successful this approach is, and the work that the CBPR+ group is doing to create a common implementation of ISO 20022 continues the transformation of cross-border payments.”
The migration to ISO 20022 is a community-driven effort that will require regular engagement from and dialogue between SWIFT’s users. SWIFT will invite the community to review and comment on the CBPR+ guidelines as they mature. The guidelines will be published on the MyStandards platform, allowing easy access to all interested parties.
The participants in the working group include senior payments experts representing Australia, Austria, Canada, China, France, Germany, Hong Kong, Italy, Japan, Luxembourg, Netherlands, Russia, South Africa, Spain, Switzerland, the Nordics, the United Kingdom and the United States as well as the International Securities Services Association.
