BoE & NPSO consult on UK switch to ISO 20022 messaging – FTSE Global Markets

The Bank of England (BoE) together with the New Payments System Operator (NPSO) and the Payment System Regulator (PSR), has launched a six-week consultation on the adoption of a common global ‘language’ or messaging standard (known as ISO 20022), for payments in the UK. The standard will be adopted across CHAPS, Faster Payments and Bacs, the UK’s three main interbank payments systems, which together process over 8bn payments per year, with a total value of over £90trn, says the central bank.

The BoE and NPSO have been working together for some time to design a ‘Common UK Credit Message (CCM)’ – a standard message to be used across all three systems. The message has also been designed to be compatible with the overseas payment systems that are adopting the ISO 20022 global standard. The change is being enabled by the central bank’s adoption of a renewed Real Time Gross Settlement (RTGS) for CHAPS payments, and the creation of a New Payments Architecture (NPA) for Bacs and Faster Payments. 

Actually ISO 20022 won’t be rolled out for some years (at least 2021, according to the BoE); but once it is it will enrich data carried in payments messages, improve compatibility across technology platforms and create opportunities for collaboration and innovation. Andrew Hauser, executive director at the Bank of England explains, “The coordinated adoption of a single standard across UK payment systems should bring many benefits for payment providers, and for the businesses and households they serve.  Risk will be reduced by allowing payments to be rerouted more effectively between systems, and by standardising and improving data supporting detection of fraud and financial crime.  Payments will flow more easily across international borders.”

Nonetheless, the switch will involve major upheaval for both payment providers and users of the system, prompting the consultation on implementation. The consultation also covers the details of how this ISO 20022 will be implemented within CHAPS, including, what additional data will become mandatory. The central bank says it is not expecting to migrate CHAPS payments to ISO 20022 until 2021 at the earliest. Victoria Cleland, the new executive director for Banking, Payments and Financial Resilience will be leading the change as part of the wider RTGS Renewal programme.

Those interested in responding to the Bank’s consultation can register here.