The ISO 20022 (or MX) standard is an international standard for the electronic exchange of financial data. It is designed to gradually replace the ISO 15022 (or MT) standard, which is currently used for financial messages such as payments, credit advice, and debit advice.
The ISO 20022 standard provides a more flexible message structure than the ISO 15022 standard, allowing for more detailed and precise information to be transmitted. It also establishes clear standards for financial data, facilitating the exchange of standardized and uniform information between financial institutions. In addition, the ISO 20022 standard is based on international standards such as XML, making it easy to integrate with other systems. It also allows for the sending of enriched messages, which include data such as images and PDF documents.
To ensure the continuity of operations and activities across the global financial system, the international financial messaging service provider Swift has adjusted its migration schedule for the CBPR+ ISO 20022 standard to align with that of the ECB. As a result, the coexistence period between the ISO 20022 and MT messaging standards for all users will commence on March 20, 2023.
On this date, banks will start migrating all their cross-border payment messages to the ISO 20022 financial messaging standard, which features more structured and data-rich messages than the previous format. The coexistence period between the two standards will end in November 2025, when MT messages will be discontinued. Banks are free to adopt the new format at their own pace between March 2023 and November 2025. Until then, real-time translation tools will assist them in receiving messages in the format of their choice.
The main differences between the two standards are:
- More flexible message structure: The ISO 20022 standard uses a more flexible message structure than the ISO 15022 standard, allowing for more detailed and precise information to be transmitted.
- Data standardization: The ISO 20022 standard establishes clear standards for financial data, allowing financial institutions to exchange information in a standardized and uniform manner.
- Use of international standards: The ISO 20022 standard is based on international standards such as XML, making it easy to integrate with other systems.
- Use of enriched messages: The ISO 20022 standard allows for the sending of enriched messages, which include data such as images and PDF documents.
In summary, the ISO 20022 standard is an international standard for the electronic exchange of financial data that offers significant advantages over the ISO 15022 standard, including a more flexible message structure, data standardization, use of international standards, and the ability to send enriched messages. The implementation of the standard varies by country and financial institution, but it is increasingly being adopted globally.