payLOCATOR. Main Concepts. Chapter 3

We continue our story about the main concepts used in IntellectEU’s innovative payment tracking solution — payLOCATOR. Today, payLOCATOR product owner Iurii Belinskiy will talk about ISO 20022 standards and their role in the modern financial world.

ISO 20022 — Messaging for the Future

We live in a world today where many communities and people speak different languages. Despite people being able to speak one or multiple languages, there are still many language barriers that exist with different people from all over the world. One of the best ways to improve the communication process would be if there was a universal language that could be used by everyone. In the world of financial messaging, there are similar messaging difficulties. ISO 20022 represents this universal language as it brings a variety of enhancements for all market participants with a possibility to fit within different business processes.

ISO 20022 is a global financial messaging standard for electronic messages exchanged between financial institutions. It standardizes the data structure for financial messaging. It provides a common platform for the financial industry for developing messages using a modelling methodology, together with a central dictionary and a set of XML design rules.

The ISO 20022 messaging standard brings a myriad of benefits to the financial messaging environment as the rich data provided enables banks to create and deliver better experiences for customers. Furthermore, it enables improved fraud prevention and greater compliance with anti-money laundering (AML) regulations.

Recently, the ISO 20022 and SWIFT communities initiated a migration process from legacy approaches and business models to an international standard ISO 20022. In the scope of the migration process, financial institutions around the globe will migrate from the legacy SWIFT MT standard to the highly structured and data-rich ISO 20022 standard. Financial infrastructures will operate the same message structure, form, and approach to transmit financial transaction information worldwide. Taking into account the feedback from the community, SWIFT will enable ISO 20022 messages for cross-border payments and cash reporting businesses starting from the end of 2022. Afterwards, financial infrastructures will have three years to operate with legacy standards until the entire migration process to ISO 20022 is completed.

Currently payLOCATOR supports participants on each leg of the described migration process, as it works with the current SWIFT MT101 and MT103 messages, as well as with the newer ISO 20022 pain.001 message. Moreover, there are different stages in the product roadmap to enforce the usage of other messages from the ISO 20022 standard. In addition, there are several approaches under consideration to implement different features and toolsets for ISO 20022 financial standard usage.

If you have any other questions, please write them in the comments and we will answer!

Also, please feel free to book a demo of the product at www.paylocator.com