ISO20022 is becoming the de facto standard for financial services messaging. This is undoubtedly a good thing – increasing globalisation is driving cross-border payments volumes so any harmonisation is welcome.
Most central infrastructure providers, such as VocaLink, welcome the arrival of this standard on the basis that it potentially delivers strategic benefits:
Service consolidation. There is the potential to consolidate clearing services to deliver a far more efficient, streamlined service. In principle, there could be one debit service and one credit service rather than multiple services across Bacs, Faster Payments Service and CHAPS.
Increase payments efficiency. Payments integrity and efficiency could be greatly improved, and compliance risk would be reduced. As payments information is enriched, there are potentially fewer failures, fewer repairs, fewer erroneous payments and less fraud.
Value added services. Greatly enhanced payment services can be offered, such as e-invoicing, which increases efficiency and shortens the processing cycle.
Enhanced government services. New and improved government services can be offered, such as Strategic Real Time Information, which will be vital to underpin the government’s aims for Universal Credit.
This is not an exhaustive list of potential benefits that can be realised with ISO20022. But is does demonstrate that ISO20022 is much more than a messaging standard. In practice it offers a standard communication mechanism for new domestic and international payment services.
ISO20022 can be complex and challenging. If you would like a simple explanation on how you can realise the benefits, please contact one of our payments experts who will be more than happy to help.
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