On May 15, Utsit hosted a webinar on behalf of the French Association of Corporate Treasurers (AFTE) on the theme of “ISO 200222 Migration: Multiple adjustments to get through 2025.”

The number of participants on the one hand and the number of questions asked on the other confirmed that the topic of ISO 20022 migration continues to generate interest and questions from corporate treasurers, as the speeches, offers and topics grouped under this generic term lack coherence. It was therefore well worth a quick overview to clarify the context, the challenges and the opportunities offered by this migration.

‍

First of all, it is important to remember that the genesis of what is commonly called "ISO 20022 migration" comes from the desire of major economic powers, via the G20, to facilitate the movement of capital, whether for businesses but especially for individuals and especially migrant workers. This is why the G20 has set the objective of making international transfers faster, more accessible, transparent, secure and less expensive.

‍

Responsible for implementing these objectives, the Bank for International Settlements (BIS) and the Financial Stability Board (FSB) have agreed to promote the use of the ISO 20022 standard as an exchange standard in order to harmonize and optimize the processing of these operations.

‍

It is therefore with this in mind that the main settlement systems (EUR, GBP, CAD, CNY, CHF, USD partially, etc.) have carried out or are preparing to carry out (USD; continuation and end in July 2025) a transformation of their systems towards this single standard to harmonize their language. For coverage to be complete, the conveyor of these orders must also use the same standard, which is why Swift is also in the process of evolving its messaging and will have completed its transformation in November 2025 (some exceptions and special treatments will still be possible but will no longer be part of the "standard" framework).

‍

By the end of 2025, Swift estimates that 80% of settlement systems will have adopted this standard.

‍

While the issue of format and standard is essential to harmonize the language between all parties involved in a payment, the issue of data quality is just as important. And since banks, as part of their obligations to combat money laundering and terrorist financing, are subject to an ever-increasing number of rules, they need to be able to use sufficient and correctly structured data to apply efficient processing to avoid false positives and thus speed up processing times and reduce costs. It is therefore quite logical that the Payment Market Practice Group (PMPG), a working group under the aegis of Swift, has decided to impose the use of the addresses of the parties involved in a payment (sender and beneficiaries, Ultimates and banks under certain conditions) in a more organized manner.

‍

This project has a significant impact on payment issuers, who must ensure the quality of their beneficiaries' information in their various databases and also between their systems so that their payment orders comply with the expectations and constraints of their banking partners. While the obligation to transmit the address details of beneficiaries, or even their bank, is already in effect, the need to transmit this information in a structured (or hybrid) manner will be mandatory by November 2026 at the latest. In the event of a necessary update (of data or tools), the project is such that it is imperative to get started now, otherwise a large proportion of your transfer orders will be rejected.

The need for issuers to structure their payment data more will also have consequences on the formats used to transmit their transfer orders to their banks since many formats commonly used today do not allow (CFONB320), or very poorly (MT101), to structure the data as expected by the banks to enable them to carry out their compliance checks.

‍

The choice of the exchange protocol used by a company to communicate with its banks is also important since FIN messaging, incompatible with the ISO 20022 standard, is evolving towards FINplus in order to keep its main characteristics and all the added value (reachability and message controls in particular) but adapted to XML messages. The corporate treasurer who uses this messaging, directly or indirectly with its banks, will therefore have to anticipate the possible impacts. Indeed, while there is no obligation on the part of Swift for companies to migrate from FIN to FINplus and replace MT messages, some banks have already planned and announced the end of these services for companies.

‍

Also, some more recent versions of exchange formats, such as pain.001 in its 2019 version (pain.001.001.09) offer new opportunities to better structure data or take advantage of new services. These include:

‍

-       The LEI: the use of this international identifier to identify a counterparty seems to be increasingly becoming the ideal solution, rather than using a name whose form, language and abbreviations or acronyms can lead to numerous malfunctions.

‍

-       UETR: While the relevance of using Swift gpi is well established, companies choosing to issue payments with their own UETR to enable payment traceability is still limited. Modernizing payment interfaces and systems can provide an opportunity to implement this service and thus benefit from it in complete autonomy.

‍

-       Date and Time: While the ability to add a time to the date in the Requested Execution Date tag may seem trivial at first, it is an essential prerequisite to facilitate the use of instant transfer remittances by businesses.

‍

Always to promote the use of instant transfers, the entry into force of European regulation 2024/886 represents a major turning point with 2 important dates:

‍

January 9, 2025:

‍

- The cost of an instant transfer cannot exceed that charged for a SEPA transfer.

- Obligation for PSPs in the EUR zone to have the capacity to receive SCT Inst

‍

October 9, 2025:

‍

- Obligation for PSPs in the EUR zone to be able to issue SCT inst

- Removal of the legal ceiling of EUR 100,000 (but a technical limit still possible per establishment)

- Obligation for banks to provide a free service to verify the consistency of the account number/name (or identifier) ​​of the beneficiary (also called Verification of Payee or VoP)

‍

This last service raises many questions both regarding the conditions of its implementation and its exploitation by companies. Without going into detail here about the different possibilities available to companies to ask their banks to control or not their payments and to execute them or not, we will simply point out that all initiatives aimed at securing payments issued by individuals and companies are welcome, and that these solutions in no way call into question the organizations or technical solutions already implemented to secure transfer orders. For comparison, just as the seat belt did not prevent the development of airbags, VoP services complement already existing security measures, it is up to each person to find the right level of service with their banks and the right way to use the information transmitted according to the 4 possible statuses (Match, Close match, No match, Not applicable).

‍

Finally, the work carried out by companies on their databases and payment interfaces can also be an opportunity to anticipate other major regulatory developments such as the implementation of electronic invoicing. The corporate treasurer can therefore work to improve the flow of data in its payments in order to facilitate the identification of paid invoices and their automatic reconciliation on both sides.

‍

As we have seen, the ISO 20022 migration project has been underway for several years and includes several components, more or less interdependent, each with its own timetable, but if they are carried out correctly by companies, everyone will then be able to reap the benefits in order to have greater confidence in the efficiency of their payment operations, both domestic and international, and anticipating these developments will allow them to avoid many pitfalls.

‍

Brice Allignon

Partner @UTSIT - Payments and Treasury projects

‍