Cross-Border And ISO 20022 Issues At Payments Canada Summit!
On Wednesday, the Summit featured virtual panels on cross-border payments and ISO 20022.
A panel of Bank of England, Payments Canada, and The Clearing House representatives concurred that cross-border payments are difficult!
In response to Saudi Arabia’s G20 presidency’s focus on cross-border payments, the Financial Stability Board created a plan in 2020. John Jackson, BofE, is significantly involved with the roadmap. He informed the gathering that cross-border frictions magnify and compound domestic payment frictions.
Money laundering laws vary by country, creating friction. Technology and data contribute. Jackson says that ISO 20022 is essential because it can harmonise information across communications even if regulations are not.
Payments Canada’s Ales Novak agreed that data harmonisation is crucial. ISO 20022 allows you to communicate, but it doesn’t solve everything.
Elena Whisler of The Clearing House in the US noted that harmonisation is difficult because various industries need distinct signals.
Whisler discussed The Clearing House’s trial service for immediate cross-border payments (IXB) with EBA Clearing and Swift. The fastest domestic payment methods are used to boost cross-border payments. After the PoC’s success, the partners are considering whether IXB can work with Canada.
Another panel discussed ISO 20022, with Swift, the Australian Payments Network, and EBA Clearing sharing migration experiences.
All three switched last month after a delay. Europe chose a big bang migration rather a side-by-side changeover. Australia has chosen a coexistence period and has 18 months to relocate all players.
Marcos Cameron from Swift says 15% of payments were using the new MX option at the time of the switch. 20% now, with 100% in 2025.
Cameron compared ISO 20022 to the changeover from landline phones to the first mobile phones, but with the future looking like the smartphone with great functionality.
The Australian Payments Network’s Robert Magee stated that ISO 20022’s greatest opportunity—enhanced data—can also be its greatest obstacle because one size does not fit all. Corporate banks have distinct needs than retail banks.
EBA Clearing’s David Renault said migrating isn’t the end of the trip. The “beautiful but complex” standard is easy to misuse, therefore market participants must take the time to do things right to prevent the same old problems they seek to avoid by adoption.
Finextra spoke to Mike Hoganson, director, Lynx, at Payments Canada, on how innovation and ISO 20022 are impacting Canada’s modernization path before the summit.
