The Payments U.K. council has delivered the first draft of the ISO 20022 payment messaging standard, fulfilling an earlier promise that it says will pave the way for a globally interoperable real-time payments system.
ISO 20022 is a set of XML, or extensible markup language, messaging standards based on a shared data dictionary and business process model. It is considered a key component of any faster payments platform because it allows banks and merchants to transport more data with a payment. The additional data could include an address for invoicing, the transaction's purpose, and instructions for tax withholdings.
Prior to agreeing on a global standard, companies worldwide deployed ISO 20022 messaging in different ways, with different information or access to information.
More than 50 global financial institutions, international clearinghouses, payments associations and supply-side representatives were involved in establishing the first draft of the Payments U.K. standard.
ISO 20022 is likely to be a real game-changer globally and domestically, enabling a level of interoperability we have never seen before," Maurice Cleaves, chief executive of Payments U.K., stated in a press release.
"The Payments U.K. team is deeply involved in this important work which not only helps us maintain the U.K.s position as a leader on the global stage but also aligns with domestic delivery of world-class payments, Cleaves added.
The first draft focuses on the messages and workflows needed in the faster payments environment and highlights a small number of gaps that the working group will need to resolve in the short term, Barry Kislingbury, senior principal consultant at ACI Worldwide, said in an e-mailed statement.
To create this first draft within such tight deadlines is a great achievement by the community and all stakeholders," Kislingbury added.
By enabling the interoperability of domestic immediate payment schemes, ISO 20022 "could lay the foundations for a global, interoperable, immediate payments environment which is a very exciting prospect for us all, as consumers and members of the industry," Kislingbury said.
While the first draft of the global standard is welcome news for organizations developing faster payments, including the Federal Reserve in the U.S., some are encouraging education and more cohesive use of the current standard in the meantime.
Nacha, the electronic payments association that operates as trustee to the Automated Clearing House, has been helping corporations and financial institutions incorporate the ISO 20022 messaging standard by ensuring they use it in the same manner for ACH transactions.
The Payments U.K. task force plans to update the first draft of the standard after meetings in Singapore in October.