What is ISO 20022?
ISO 20022 is a global standard representing a single standardisation approach (methodology, process, repository) developed and used to facilitate electronic data interchange between financial institutions. This global industry standard was developed within the International Organization for Standardization (ISO) Technical Committee 68 (TC68) Financial Services and is maintained internationally under ISO governance.
The ISO 20022 standard is a system for defining financial data, standardising that data and grouping that data into transactions. These transactions, or data exchanges, allow participants to carry out business processes using the data exchanged between them. The true value of ISO 20022 is that the standard defines common data components that can be reused and grouped together to define complex concepts. The reusability makes it possible to establish data interoperability.
Benefits of ISO 20022
ISO 20022 is a single, common ‘language’ for all financial communications – no matter where a firm is based. This common language allows participants and systems in different markets to communicate in a consistent message format using agreed terminology. This has particular benefits for international financial communication between financial institutions, their clients and domestic or international ‘market infrastructures’ (e.g. payment schemes) involved in the processing of financial transactions. Some examples of how using ISO20022 can be effective include:
- Improving compliance and regulation, supporting detection of fraud
- Harmonisation with payment systems around the world who have already adopted ISO 20022
- Deliver remittance data that helps explain payments between businesses
- Creating and supporting an innovative financial sector.
The ISO 20022 standard is network agnostic and available for use on any network for any purpose defining data in scope of financial services.
ISO’s various standards are developed through Technical Committees and their designated subcommittees. One of ISO’s 200+ technical committees, Technical Committee 68 (TC68), is responsible for developing global financial industry standards. TC68 is the only ISO Technical Committee fully dedicated to creating financial industry standards. Since 1948, members of the financial services industry have collaborated under the ISO banner to develop technical standards to use on a global basis.
The ISO 20022 Registration Management Group (RMG) is a global group. This global group composed of senior industry experts that acts as the registration body for the ISO 20022 standard. The RMG manages Standards Evaluation Groups (SEGs) in Payments, Securities, Trade Finance, Foreign Exchange and in the Card and Retail areas. It also manages subgroups such as the ISO 20022 Real Time Payments Group, which aims to increase harmonisation around the use of ISO 20022 for real time payments.
The ISO 20022 Registration Authority (RA) reports into the RMG and works with the RMG, SEGs and relevant sub-groups to validate and process standards change requests, registration requests and business justifications from participants in accordance with ISO 20022 Registration Procedures.
UK engagement in ISO 20022
The UK standards community has been actively involved with ISO 20022 from its inception via the British Standards Institute (BSI), the body which led the ISO development work that delivered ISO 20022. The Pay.UK Standards Authority actively participates in the governance structures and bodies of the ISO 20022 standard, acting on behalf of the UK’s interests where appropriate.
Members of our Standards Authority participate in TC68 and its sub committees, including TC68/SC8, TC68/SC9 and the ISO 20022 Registration Management Group on behalf of the UK.
ISO 20022 adoption for UK payments
The payments industry in the UK has a long history of being committed to common industry standards and this commitment continues with the use of ISO 20022.
From a regulatory perspective, the Payment Systems Regulator’s Specific Directions for Pay.UK’s introduction of the New Payments Architecture includes, as a key principle and requirement, the adoption of ISO 20022 as the payment messaging standard.
In addition, the Bank of England is undergoing a programme for the renewal of its Real Time Gross Settlement (RTGS) system. As a part of this infrastructure renewal process the Bank has taken the decision to adopt ISO 20022, which it considers vital to ensuring data interoperability across the UK’s main interbank payment systems and compatibility with the emerging international consensus.
Pay.UK and the Bank of England are publicly committed to working together on the implementation and maintenance of ISO 20022 in UK Payments to maximise the benefits for the UK’s main interbank payment systems.
How do I find out more?
For further information on the ISO 20022 standard, TC68 and its sub committees, ISO 20022 Registration Management Group (RMG) or the ISO Registration Authority (RA) please visit: www.iso20022.org