ISO20022 – a new, shared ‘language’ for payments
Published: 29 October 2020
To make a payment, the participants in it need to be able to communicate with each other in an agreed format that is a sort of shared language. It is therefore said that a payment is communicated through a shared standard. Around the world, central banks, banks and financial infrastructures use the SWIFT network and its format and standard to execute payments. However, SWIFT's old standard was limited in its design. Over the autumn, SWIFT has communicated an updated strategy and timetable to migrate to a new format designated ISO20022 that supports the current demands for more information. ISO20022 can cope with a huge amount of information but, to create this standard, the payment market must cooperate and agree on which information is to be included so that all parties in the payment chain are speaking the same language. The transition for the payment market will start in November 2022 when the Eurosystem and ECB migrate to ISO20022. Worldwide, the transition is expected to proceed until 2025, which is SWIFT’s end date for the old format and the old standard.
For the Riksbank and the institutions that are participants in the Riksbank’s RIX system, this means that technology, processes and operations need to be adjusted and developed. ISO20022 will help make it possible for larger amounts of smoothly-running payments to be made over national boundaries, and a working group has been created with the other Nordic central banks to jointly investigate how the new format can be used and how the new standard may be designed. Together with the market, the Riksbank has also initiated work in using ISO20022.