What Does ISO 20022 Mean For The Payments Industry?

Apr 28, 2017

International standards body ISO has introduced new specifications for mobile banking with the aim of promoting financial inclusion.

The World Bank aims to have universal financial access by 2020. The new standards will play an important role in this concern. Given technology will be supported and implemented in the area of financial services, the standards will help refine and better the experience of the end user via other standards in the sector such as ISO 20022 for financial messaging.

The messaging standard called ISO 20022 is going to have a major impact on electronic payments in the future. ISO 20022 uses XML (extensible markup language) to exchange information across the Web without difficulty. It’s a Web-aware language that can be used to define messages.

The standard is developed to make it easier to exchange more information. The Federal Reserve Banks are persuading more players in the payments industry to make use of this standard. The latter is already used by Visa Inc. and in the Single European Payments Area (SEPA), an initiative of the European Union to facilitate payments in over 20 countries.

With this in mind, it’s critical to turn to a reputable payment processor like emerchantbroker.com to get the best for your business needs. EMB, voted the #1 high risk merchant services provider in the US and named one of Inc. 500’s Fastest Growing Companies of 2016, offers a low-cost and secure high risk merchant account to merchants of any type and size. EMB boasts an A+ rating with the BBB and A by Card Payment Options.

According to a 2016 background paper from the Federal Reserve, ISO 20022 is a strong financial-messaging standard thanks to which the end-to-end flow of payment information from the originator to the beneficiary can be realized.

ISO 20022 payment messages are designed for rich payment data and have separate fields to carry specific data elements such as longer name fields, address information, and structured remittance information.

ISO 20022 messages can be 10 – 50 times as large as typical credit/debit card or automated clearing house network messages. This makes the standard a perfectly useful means to connect remotely stored invoicing and remittance information with payment data.

For corporates today, mobile payments, ISO 20022 and real-time payments aren’t something unfamiliar among these business customers. However, there are other high-profile corporate banking innovative solutions that are among less familiar trends. E.g., blockchain enjoys enough familiarity only among 3% of companies. Only 5% say they are very familiar with open banking via API.

Though the standard has a number of important capabilities, taking full advantage of it by US merchant acquirers, card-accepting merchants, and others in the payments industry isn’t expected to occur immediately.

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