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The ISO 20022 standard stands for globally uniform formats in payment transactions. Payment transaction data are structured on the basis of XML so that the metadata of a transaction can also be mapped. Using the example of a transfer (pacs.008) it becomes clear that a payment can go through many stations (A-D) to the destination:
IS0 20022 – What is regulated?
The ISO 20022 currently regulates Almost 700 message formats not only for payment transactions, but also in the areas of securities transactions, foreign trade finance and treasury. A distinction is made between 16 message types in the area of payment transactions. The most relevant are:
- Payments Initiation (pain)
- Payments Clearing and Settlement (pacs)
- Cash Management (camt)
What do the abbreviations mean?
After the message type as an abbreviation in letters, numbers separated by dots follow:
By far the most common message in payments is the credit transfer pacs.008. The current version (as of 2020) of the ISO standard is pacs.008.001.09. At the same time, the version pacs.008.001.08 is used with SWIFT (CBPR +) and TARGET2, with EPC (SEPA) still pacs.008.001.02.
It is noteworthy that many systems require different handling of the format, even with supposedly the same version number. E.g. different field lengths are permitted or fields are not permitted altogether.
ISO 20022 – Why are there different versions?
When defining a message type, the ISO organization tries to cover everything as possible, i.e. to set the framework completely. The users (e.g. SWIFT or SEPA or the banks behind them) can request changes and their own versions. There must be good reasons (mostly automation) for a new version that must also benefit several participants. The version number is then incremented. Usually a format ABCD.123.123.005 has a smaller size than its “apparent” predecessor ABCD.123.123.004.
New “variants” of the format are defined for extensions.
Example: in the Eurosystem only payments in euros are accepted and the message format is therefore (still) restricted to this one currency, while SWIFT must of course be capable of multi-currency.
Another prominent example of a discrepancy is the handling of a pacs.008 with SWIFT and TARGET2. At T2, individual payments are processed and the system does not accept collector files. In the ISO standard and in SWIFT (CBPR +) these are absolutely permissible.
Modern payment systems such as CBPay can handle different types of message formats and of course also convert them into older formats (ISO 15022, SWIFT MT).