ISO 20022 payments regulation changes
Read time: 19 mins Added: 13/01/2025
Timelines described below are subject to change by industry bodies. Date last amended: January 2025
Banks and businesses across the globe are preparing to change the way payments are communicated. A new messaging standard called ISO 20022 is being adopted that will allow more data to be included. Below we outline what you need to know about the new messaging standard, key dates and what Bank of Scotland is doing to support clients during the transition period.
What is ISO 20022?
Depending on where they come from, payments are often in different “languages” - using varying messages, formats, codes, and fields all strung together with different integration types. Get any of this information wrong and it could delay your payment, causing unnecessary stress. ISO 20022 aims to change all of that and make sure that, when we make a payment, we’re all speaking the same language.
ISO 20022 is a standard suite of structured data formats used in the processing, management, and reconciliation of payments. It provides an increased amount of richer data and enhances every stage of the payment journey.
In the coming years you can expect to see the processing of payments speed up. And the enriched data that comes with them will mean you will be able to reconcile incoming transactions more easily, with less manual intervention.
Key migration timelines
Swift – which owns and operates the world’s payment infrastructure – is in the process of adopting the ISO 20022 format globally. They aim to have the core payment migration complete by November 2025. Swift is mandating those who use their infrastructure to adopt the format as well, so that every bank, everywhere, uses the same language.
From May 2025, CHAPS payments between Financial Institutions will require the use of Legal Entity Identifiers and Purpose Codes, with Purpose Codes also being required for property related transactions.
Bank of Scotland will be introducing the option to include this information before the end of 2024, allowing clients to become familiar with the new requirements ahead of the mandatory date.
November 2025 sees the completion of Swift payment migration to ISO 20022. It will also see the introduction of hybrid address options for Swift and CHAPS, which will require a minimum of town/city and country populated in specific fields.
From November 2026 all Swift and CHAPS payments will need to use either fully structured or hybrid addresses. Unstructured addresses will no longer be supported and should not be used. Structured remittance information will become mandatory for CHAPS from November 2027.
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Benefits
Over time businesses will see a number of benefits from the introduction of ISO 20022:
- Processing speed: Structured data will allow a reduction in manual processing and better automation of payment processes such as AML and sanctions checking. This will allow corporates to transact much more efficiently with their payment counterparties.
- Improved reconciliation: Message standards are extensible which means much more information can be transmitted with a payment. This will allow corporates to vastly improve reconciliation processes by making use of this room for additional data.
- Cost reduction: Greater standardisation will result in the simplification of data that corporates need to hold and send to their counterparties and reduced integration costs.
- Innovation opportunity: As adoption increases, the advantages of ISO 20022 will facilitate greater innovation opportunities for corporates and banks, particularly when combined with other technology advances such as cloud computing and investment from infrastructure providers.
Considerations
While much of the heavy lifting will be undertaken by us (or your Bank), there will be a number of things that corporates will need to consider:
- In moving to structured data, you will need to think about your own migration journey starting with a review of information about payment counterparties and how this will be populated in a structured format.
- Consider how and what you capture when setting up a new payment counterparty in the future. Changes will be made by electronic banking systems to facilitate the entry of structured information by November 2025.
- As ISO 20022 becomes more widely adopted, countries around the world will require more information to be provided with a payment such as Legal Entity Identifier and payment purpose codes.
- Corporates will need to think about how these emerging requirements will be captured and stored.
Corporates should also engage with their ERP vendors to ask what they are doing to support the migration to ISO 20022.
Investing for the future
Our ISO 20022 journey began in 2016 as we looked to develop our plans to:
- respond to regulatory requirement to migrate to the new standard by the established deadlines;
- support the migration of the GBP and EUR Clearing systems that we are direct members of;
- support the needs of our Corporate and Financial Institutional clients on this journey.
The major outcome of this was the design and build of Lloyds Bank Gem®. Offered to Corporate and Institutional firms, this is our ISO 20022 and API-enabled cash management and payments platform, as well as our International Payments Platform.
To find out more about ISO 20022 or to see if Lloyds Bank Gem is suitable for your business, speak to your relationship manager.
Lloyds Bank Germ is provided by Lloyds Bank. Lloyds Bank Gem is a registered trademark of Lloyds Bank plc.
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Below is a summary of the current Swift MT formats and their MX ISO 20022 equivalents.
Existing FIN MTs
ISO 20022 equivalent
MT 101 relay pain.001.001.12
(Interbank)
MT 102
MT 102 STP
MT 103 REMIT
pacs.008.001.12
MT 103
MT103 /RETN/
pacs.008.001.12
pacs.004.001.13
MT 103 STP
MT 192
pacs.008.001.12
camt.056.001.11
MT 196 (Response) camt.029.001.13
(ONLY as a response to camt.056)
MT 200 pacs.009.001.11 MT 201
MT 202
pacs.009.001.11
pacs.009.001.11
MT 202 (with reimbursement Agents – Fields 53 and 54)
MT 202 COV
pacs.009.001.11 – ADV
pacs.009.001.11 COV
MT 202 /RETN/
MT 203
MT 204
pacs.004.001.13
pacs.009.001.11
pacs.010.001.06
MT 205
MT 205 COV
pacs.009.001.11
pacs.009.001.11 COV
MT 205 /RETN/ pacs.004.001.13 MT 210 camt.057.001.08 MT 292
MT 296
camt.056.001.11
camt.029.001.13
(ONLY as a response to camt.056)
MT 900 camt.054.001.12 MT 910
MT 920
camt.054.001.12
camt.060.001.05
MT 940
MT 941
MT 942
camt.053.001.12
camt.053.001.12
MT 950 camt.053.001.12 -
Cross-border Payments and Reporting Plus (CBPR+) is a market practice defining how ISO 20022 will be used for cross-border payments and cash reporting on the Swift network.
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High-Value Payments Plus (HVPS+) is a market practice originated as part of the ISO 20022 harmonisation initiative. It defines how ISO 20022 should be used for high-value payments market infrastructures such as CHAPS.
Both sets of standards are available on Swift MyStandards.