Accuity has published a White Paper on the new standard which it describes as a common standard language for payments messaging. It was developed to replace a proliferation of disparate message formats that arose over the years in line with the growth of the internet, other technological advancements, and specific jurisdictional requirements. ISO 20022 ensures that the sender and receiver of a message interpret the information exactly the same way by addressing 2 key elements of messaging communication: semantics and syntax. The initial focus of ISO 20022 “is on international (cross-border) financial communication between financial institutions, their clients and the domestic or international ‘market infrastructures’ involved in the processing of financial transactions”. However, ISO 20022 is expected to reach even further and completely transform the entire payments ecosystem. China, Japan, India, Brunei and Switzerland are early adopters, others will follow. In the UK, for example, there are currently 3 different infrastructures, each using its own format to send payments domestically: Clearing House Automated Payments System (CHAPS), BACS and the Faster Payments Service (FPS) – all of these are said to have committed to standardising using ISO 20022. It is said that the new standard has potential benefits when screening for financial crime, as an advantage of the ISO 20022 message format is that its inherent extensibility can accommodate more detailed information about all parties involved in a payment.
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