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Common vocabulary for the development of financial messaging

ISO 20022 is the standard used by the financial services industry to develop consistent financial messaging in payments and transaction banking.

Throughout the history, financial messaging has not been uniform between markets and jurisdictions, and banks. However, recent developments have cleared the road for ISO 20022 to become a true worldwide standard in financial messaging as some of the largest payment clearers, central banks and SWIFT have made announcements about moving into ISO 20022 instead of various other legacy messaging formats.

On this page:

  • we list some of the most widely used ISO 20022 variants defined by Market Infrastructures, to all of which XMLdation has off-the-shelf support.
  • explain how we support banks in adapting ISO 20022

We also created an Infographic to explain how ISO 20022 is being used in payments domain and to list important things to understand when dealing with ISO 20022 Payments Messages.

Market infrastructures are moving to ISO 20022, enabling the financial services industry many new opportunities for better payment services.

Market infrastructures

Market infrastructures in banking can roughly be split into

  • High value payments schemes (often called real-time gross settlement systems = RTGSs), run mostly by central banks.
  • Low value payments schemes such as STEP1 in EU, BACS in UK or EPN ACH in United States.
  • Real-time payments schemes such as SCTInst/RT1, TIPS or TCH RTP.
  • Securities repositories

It is estimated that over 80% of the world’s cross border payments will move to ISO 20022 when European Central Bank, Bank of England, The ClearingHouse, Federal Reserve Banks, and SWIFT have all moved. Many central banks and clearers have also committed to migrating to ISO 20022. In addition, ISO 20022 has been adopted by many securities repositories.

XMLdation offers an automated bank onboarding and test automation solution for market infrastructures

High Value Payments Initiatives

Many high-value payments systems and/or Real-Time Gross Settlement (RTGS) run by central banks have selected ISO 20022 as the base standard for their system modernisation initiative. Below table lists some of initiatives whose ISO 20022 variant data format XMLdation supports.

Scheme or Iniative Scheme owner Purpose and format
TARGET2 and T2S European Central Bank ECB is has launched a project to consolidate TARGET2 (RTGS) and T2S (Securities settlement), called TARGET consolidation. The new system messaging scheme is based on ISO 20022.
CHIPS The Clearinghouse, United States CHIPS is the private-owner large value payment system in United States. The Clearinghouse has set up an ISO 20022 Program, which aims at migrating the current set of messages to a new one based on ISO 20022.
Fedwire Federal Reserve Banks, United States Fedwire® Funds Service is the federal RTGS system in United States. Federal Reserve Banks have initiated Fedwire® Funds Service ISO® 20022 Implementation project.
CHAPS Bank of England CHAPS is the RTGS in United Kingdom. Bank of England is executing ISO 20022 CHAPS migration program.
Lynx Payments Canada Lynx is the new modernized large-value payments system (RTGS) in Canada, operating on ISO 20022-based messaging.

Low Value Payments and Real-time Payments Initiatives

It is largely accepted that all new Real-Time Payments Systems use ISO 20022 as the base standard. Recently, the owners and stakeholders of several low-value payments schemes have also committed to migrate to use ISO 20022. Below lists some of these initiatives whose ISO 20022 variant data format XMLdation supports.

Scheme or Iniative Owner Purpose
SEPA / STEP2 EBA Clearing STEP2 is the clearing and settlement system for low-value payments, ie SEPA payments based on ISO 20022, in the Eurozone run by EBA Clearing.
SEPA / RT1 (SCTInst) EBA Clearing RT1 is the clearing and settlement system for real-time payments, ie SCTInst payments, in the Eurozone run by EBA Clearing.
TIPS European Central Bank TARGET Instant Payment Settlement (TIPS) is a real-time payment settement system run by ECB. TIPS was developed as an extension of TARGET2 operating on ISO 20022 messaging and settles payments in central bank money.
TCH RTP The Clearinghouse The RTP® network is a real-time payments platform available for United States depository institutions, operating on a messaging format based on ISO 20022.
FAST Monetary Authority of Singapore  
NPP NPP, Australia NPP is the real-time payments platform in Australia, operating on ISO 20022-based messaging.
AFT Payments Canada AFT is the legacy low-value payments system in Canada run by Payments Canada. AFT will be migrated to ISO 20022 in the future.
Nordic real-time payments P27 / NPC Nordic Payment Council has defined an ISO 20022-based messaging set which is used by the upcoming Nordic real-time payments system run by P27.
PESALink IPSL, Kenya PesaLink is a real-time payments platform available in Kenya. IPSL, the operator, has started a migration to a messaging format based on ISO 20022 from ISO 8583.
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Banks need to adopt to ISO 20022 on two fronts:

1. Sending and receiving payments

Banks who use legacy standards for sending and receiving payments to and from market infrastructures such as central banks and clearers, and partners such as correspondent banks, will need to migrate their payment and messaging systems to ISO 20022. The timings of the moves to ISO 20022 depend on the migration plans of these parties.

The changes in message formats used on this front are usually the following:

  • Messages used with market infrastructures are often based on SWIFT MT, or proprietary formats. Each of the market infrastructures has or will define their own variation of the respective ISO 20022 set of messages used for clearing, which the bank needs to adapt.
  • Messages used with correspondent banks who connect over the SWIFT network will need to adapt to SWIFT’s MX messaging format, which is based on ISO 20022.
  • Messages banks use with correspondent banks connect over other VPN networks or other methods can remain as agreed between parties.

This often means the bank has to

  • adapt its systems to several different ISO 20022 schemas
  • make significant changes to its systems
  • test comprehensively by simulating payment instructions and transactions with market infastructures, as well as correspondent banks.



XMLdation offers a self-service testing tool for banks to transition to ISO 20022-based messaging with market infrastructures and correspondent banks.

2. Integrating with customers

Banks have an incentive to migrate to use ISO 20022 in automated messaging with their corporate clients because then they will be able to offer banking products and streamline their internal processes that utilise the rich data available in ISO 20022. Examples of these are:

  • Automated reconciliation between payments and invoices based on available reference data
  • Improved KYC, AML and sanctions checks
  • Reduced amount of payment processing failures due to more structured and accurate payment data
  • Better cash management reporting due to replacement of data truncation and ISO20022-based reporting messages from parties involved in the transactions.

However, this means that any customer-facing IT applications, such as integration gateways, must be able to process data in ISO 20022 format in order to do this.

When banks take ISO 20022 into use in client integration, they need to define their own variant of the ISO 20022 set of messages suited for integration with clients (such as payment instructions). This variant takes into account how the bank uses the attributes present in the messages.

The variance in adoption of ISO 20022 for client integration by banks has in forming the Common Global Implementation Market Practice (CGI-MP) initiative. CGI-MP’s aim is to enable multi-bank, standardised, and global ISO 20022 XML implementations in the corporate-to-bank business area.


XMLdation offers a self-service client testing tool for client integration which enables banks to offer ISO 20022-based messaging integration.

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The party who reaps the most benefit out of the global change is the party actually using the payments services – corporates.

Corporates will be able to complete payments in near real-time, with tracking and a lot more associated data to help associate the payment to other data in cash management, trade finance, FX and other use cases.