ISO 20022 arrives in Aotearoa
24 Mar 2023
Generational change in global payments infrastructure.
This week the financial world was watching as Aotearoa New Zealand became the first country in the world to start processing cross-border transactions with Swift’s new ISO 20022 messaging standard – a universal language and structure for financial institutions to exchange payments data worldwide.
This phased adoption is part of a global initiative by Swift, and by November 2025, will apply to all payments that go through Payments NZ’s High Value Clearing System, and all cross-border transactions in Aotearoa.
The change is a major milestone for the payments community in Aotearoa and signifies the beginning of a period of transition for the industry as financial institutions move their high value and cross-border transactions across to the new common messaging standard.
For the last three years, 13 different financial institutions in Aotearoa and their multiple representatives have been involved in the roll-out, with strong collaboration being seen among the participating communities and organisations.
The rollout of ISO 20022 on a global scale is massive, with more than 11,000 institutions in over 200 countries and territories beginning the migration to ISO 20022 for payments and related messaging.
A new era of global payments
The world is at the beginning of a new era for payments, one in which the exchange of richer payments data and other related information is made much easier, faster and more cost-effective. ISO 20022 introduces a common language for disparate payment systems to talk to one another and lays the foundations for future high value payments innovation.
With a uniform rulebook built for today’s complex world, the international banking system will have much more steady, efficient cash flow between different jurisdictions, as well as improved compliance from financial institutions. This includes things such as sanctions checking, for example, a system being able to differentiate between immediately knowing whether a payment is coming from a business on Cuba Street in Wellington or from a business in the country Cuba.
The significance and scale of this change means care needs to be taken with implementation, with a phased roll-out planned across domestic high value and cross-border payments, with the existing older messaging standard being retired by November 2025.
Payments NZ Chief Executive Steve Wiggins says ISO 20022 holds exciting possibilities for the future of payments in Aotearoa.
“ISO 20022 is the most significant development to the core payments system messaging in Payments NZ’s High Value Clearing System, which transacts around $5 trillion per annum.
“This is a global generational change, the scale of which is unprecedented in recent times with thousands and thousands of hours from Swift, Participants of our High Value Clearing System and the Reserve Bank of New Zealand Te Pūtea Matua going into this project.”
Rather than managing multiple market systems all speaking a different payments language, with ISO 20022 financial institutions will be able to share richer, enhanced and more structured data, such as remittance information, and name and address fields that identify the parties within a payment chain.
This in turn creates a better flow of payments through networks and streamlines processing, particularly for cross-border transactions.
Pat Antonacci, Chief Customer Experience Officer for Swift says, “Financial institutions and infrastructures around the world have embraced ISO 20022 for its potential to unlock significant new opportunities in both payments processing and service innovation.
“Payments NZ’s successful migration puts New Zealand at the forefront of realising those possibilities, and we look forward to working together to extend the benefits of rich data across the cross-border payment ecosystem.”
World-class payments in Aotearoa
Our vision at Payments NZ is to have world-class payments for Aotearoa. We have many payments modernisation activities in place that are in development or progressing well.
Wiggins says there is strong momentum within the industry to deliver change and modernise Aotearoa’s payments infrastructure for the future.
“Alongside our other projects, such as 365-day payments and ongoing investigations into real-time payments, Aotearoa is really at a crossroads of change and possibilities in terms of payments modernisation.
“We are looking forward to taking people on the journey with us as we continue to work to deliver the payments future New Zealanders want and need.”
Behind-the-scenes, Payments NZ is also working on the highly anticipated 365-day payments, which will start being available to New Zealanders from 26 May, and are progressing investigations into real-time and next-generation payments capabilities. The Payments NZ API Centre continues to lead open banking in Aotearoa.
Collectively, our body of work continues to promote interoperable, innovative, safe, open and efficient payment systems for Aotearoa. Join our mailing list if you would like to receive news, updates, and our Top Reads newsletter, which brings you the latest payments news and trends from around the world.