ISO 20022 is a standard used for data exchange between banks and between banks and companies worldwide. It was developed in 2004 at the initiative of the International Organization for Standardization (ISO)*, SWIFT (Society for Worldwide Interbank Financial Telecommunication) and 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 is the world’s largest international standards organization with a membership of 165 national standards bodies to develop international standards in various fields.
What is it used for?
XML messages can contain a great deal of information: details on the tax treatment of a transaction, enrichment of transaction labels, information on the intermediaries in the payment chain, etc. In addition, the XML format supports non-Latin characters (Chinese, Cyrillic, etc.), which allows for true international harmonization of payment processes.
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.