How to overcome the critical migration challenges of ISO 20022

At AccessPay, we witness firsthand the common challenges organisations encounter when migrating to the ISO 20022 messaging standard.

Typically, it comes down to whether the organisation has the right data, such as the structured address or purpose of payment tag, to add to the payment instruction.

Then, it’s about getting the format of those messages correct.

Some of the required data will already be in back-office systems, and some will need to be enriched to be in the required format for the organisation’s banking partners.

The formatting aspect can be particularly tricky. Remember, ISO 20022 isn’t just a single format; it’s a framework every bank implements differently, which has implications for how organisations provide the payment message to their banking partners.

Different banks, different implementations, different formats

So why are banks implementing the ISO 20022 framework differently? Every bank has its unique IT setup and processes for settling payments. The systems and processes also vary by payment type, for instance, domestic versus cross-border payments.

As a result, payment instructions must be provided in a format that meets the bank’s specific system requirements for that particular type of payment.

To add to the complexity, each bank interprets and implements regulations, such as those related to money laundering and financial crime, differently, impacting how it uses the data in payment messages.

Data enrichment and transformation

With ISO 20022, there are multiple places where the various data points, such as the international bank account number (IBAN), Bank Identifier Code (BIC), or service level tag, can be attached.

However, from the bank’s perspective, the data may need to be in a certain placeholder to meet its specific system requirements.

For instance, one bank may use the data in a given placeholder for its AML checks, while another can’t because of how its systems use the data.

Consequently, corporates and other organisations must ensure they have the right data in the right format for their banking partners, the types of payments made through those banks and the countries in which those payments are being made.

Where there are multiple banking partners, this naturally becomes more complicated.

This is where AccessPay comes in. As a corporate-to-bank integration provider, we take data from the organisation’s back-office system in whatever format it is provided. We then transform it into the receiving banks format to meet its system requirements.

The consequence of non-compliance

If a CHAPS payment isn’t compliant with ISO 20022 requirements by May 2025, it will fail. This means the organisation’s bank will be in touch to request the missing data.

Without it, the bank cannot send the payment to the Bank of England, which operates the CHAPS infrastructure.

As such, if organisations want payments to be sent without delays, it’s important they make sure they have the missing data and add it to payment messages in the correct format by May 2025.