Interesting post in the Cryptopolitan about ISO 20022, which most readers who pay attention to payments will know is becoming the de-facto standard for payments messaging. All new instant payments systems globally utilize ISO 20022 and conversions will be coming (and underway in some cases) for wire transfers and SWIFT. So, the author in this piece review these realities and how that standard is also being adopted by the crypto asset space.
‘ISO 20022 protocol is a standard for electronic data interchange between financial services in the payment industry. It is based on DLT (distributive ledger technology) and uses ISO 20022 as a messaging mechanism…
ISO 20022 is a more advanced format based on the XML protocol and the Abstract Syntax Notation One (ASN.1) specification for bank communication, which meets the ISO 20022 standard for financial messaging. It better reflects today’s financial activities and transactions, locally, regionally, and globally…
Banks worldwide have already committed to this worldwide regulatory framework, which backs SWIFT and the Federal Reserve. And as we move toward this new quantum financial system, any third party that wants to interact with banks must be able to use the ISO 20022 format.’
The piece goes on to point out specific cryptocurrencies that have already adopted the standard. It also lists a number of timelines for ISO 20022 conversion, with one of the most important being SWIFT, which is underway for later this year. Any reader who wants a refresher on the issue can take the few minutes to read through this useful summary article.
‘SWIFT’s technological shift from MT to ISO 20022 will be complete. Banks will need to upgrade their messaging interfaces and test them before November 2022 to ensure they are compatible with the new payment communication standard…
Banks are under competitive strain to migrate to the ISO 20022 standard as the overall migration of the payment industry toward immediate payments makes their existing goods and services vulnerable…
Because ISO 20022 is a more modernized and versatile standard than conventional legacy formats, it requires significantly greater data volume processing. As a result, bank systems and databases will need to be capable of handling these larger volumes at quicker speeds for real-time payments, daily liquidity management, compliance checks, and fraud detection and prevention…
It’s critical to allow enough time for testing so that syntax and formatting information is accurate, and the data’s migration into all linked payment and clearing systems. Testing should ideally be completed by the second quarter of 2022 at the latest.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group