ISO 20022: International payments in Iziago
ISO 20022 is a standard used for data exchange between banks and between banks and companies worldwide.
What is ISO 20022?
ISO 20022 was developed in 2004 at the initiative of the International Organization for Standardization (ISO)*, SWIFT (Society for Worldwide Interbank Financial Telecommunication) and the banks. The latest version of ISO 20022 is version pain.03.
In Europe, the Single Euro Payments Area (SEPA) is based on ISO 20022. Banks in North America and Asia have been very interested in this standard for several years. Only Latin America, Africa and Russia are lagging behind in the deployment of ISO 20022.
*The International Organization for Standardization (ISO) is the world’s largest international standards organization. More specifically, it is a network of 162 national standards institutes where international standards are developed in various fields.
What is it used for?
The ISO 20022 standard can be used for payments and collections, but also for information exchanges such as account and bank card statements, securities trading, direct debit changes, investment and financing management, foreign trade, treasury and finally for administrative messages such as rights management and account openings and closings.
The objective of this ISO standard is to promote a worldwide convergence of all message standards so that all the different financial departments with their own payment systems can communicate with each other.
To guarantee this international convergence, ISO 20022 messages must respect a common and structured syntax while overcoming semantic barriers and the diversity of terms used in the sector. Therefore, for the exchange of data between the client and the bank, messages are based on the XML computer standard, an evolving language that can be adapted to local specificities and take into account new regulations for example.
Indeed, XML messages can contain a lot of information: details on the tax treatment of a transaction, enrichment of transaction descriptions, information on intermediaries in the payment chain, etc. In addition, the XML format supports non-Latin characters (Chinese, Cyrillic, etc.) which enables true international harmonisation of payment processes.
Benefits for companies
This standard allows all actors, banks and companies, to gain in productivity because all messages have identical tags (to identify the bank, for example) allowing an automatic integration in the processing chains as a real STP (Straight Through Processing). Transactions are only entered once, at the beginning of the process. They are then transmitted without human intervention from department to department and can be processed by the different software programs used. Processing times and risk of errors are considerably reduced and there is no loss of information.
However, there is a downside: some banks require specific XML tags to be filled in according to their local regulations. For example, an Indian bank will not be able to process an “XML compliant” file if the optional “tax declaration” tag is missing.
ISO 20022 in Iziago
The Iziago software generates ISO 20022 payment files compatible with banks worldwide. You can either enter your (SEPA or international) payments in Iziago by filling in the information requested by your banks, or import an order file in Excel or text format with separators so that Iziago can convert it into a SEPA or ISO 20022 XML payment file. Then, you just have to upload your payment file on your bank’s website directly in Iziago.