Countries around the world are adopting a messaging standard that allows more information to be sent with a payment, but it has been slow to gain traction in the U.S.
Unlike other parts of the globe — but very much like its approach to the metric system — the U.S. hasn't been as quick to adopt the ISO 20022 standard, and now experts in the field are prepared to discuss, educate and promote the best practices for adoption.
The Accredited Standards Committee X9 Inc. has formed the U.S. ISO 20022 Market Practice Industry Forum that will research and document recommendations in order to spark its usage in the U.S. In Europe, for SEPA and the U.K. for the Real-Time Gross Settlement Service, the
"As more financial institutions, businesses and their financial technology providers deploy tools that use ISO 20022 messaging, they will likely also expand their message use," David Repking of the commercial banking business at JPMorgan Chase, said in a press release. Repking has taken the role as chairman of the new forum.
"Our newly formed Market Practice Industry Forum is looking forward to working with all stakeholders in the payments community to make it easier and more effective for these entities to adopt ISO 20022," Repking added.
The group plans to explore best practices for cash and payment management, sending remittances and adopting the standard at the corporate level.
The group also plans to examine a "lighter ISO 20022 subset" as an approach that could help small businesses reduce the use of checks. It would be part of the group's general research into simplifying adoption for businesses and the payment processors serving them as well as the hundreds of accounting packages that might need less complex solutions.
The forum is built on the belief that ISO 20022 adoption is key to modernizing U.S payments systems, and advocates across the globe cite it as a key element of any faster payments networks or rails.
Such a change does not occur overnight. Even though the standard has been in place for 10 years and provides substantial benefits, its approximately 350 data fields require a significant change in how data is entered, stored and shared.
In that manner, the standard can significantly change the expensive data management of most payment rails created with silos of data, sometimes in different formats.
"One of the most valuable aspects of ISO 20022 is the data richness of the messages and the ability to easily identify the data fields systematically and process them," X9 stated. "A large number of data fields are supported, but only those data fields that are required to effectively process the payment need be sent. Systems that implement ISO 20022 identify optional and mandatory fields to optimize performance."
Initial discussions in the U.S. about five years ago centered on adopting ISO 20022 to coincide with development of faster payments systems, initially by migrating it to the wire transfer ecosystem and as part of ACH messages on B2B payments. It continues to be part of the
To lower barriers to the standard's adoption, the new group says it will promote consistent industry approaches for ISO 20022 implementations. The group hopes to prevent unguided, non-standardized ISO 20022 adoption, fearing they often result in deviations between applications and lead to higher costs.
X9 is targeting group members from a broad spectrum of stakeholders, including corporations and other industry organizations, all with the intent to complement other industry activities.
