US Payment Systems and ISO20022
The US wire payment systems, Fedwire and CHIPS (the Clearing House Interbank Payment System) plan to go live with ISO 20022 as of 2020 (first phase). In preparation, extensive business case development and industry consultation involving banks, payment services end users and others has occurred over the past two plus years.
Business justification for the new systems upgrades include:
- Regulatory compliance,
- Data granularity (a field for every data element) and data capacities, the efficiencies to all parties in of not having to chop and move data, etc.
- Interoperability of payment systems, domestic and xborder. Think SWIFT and correspondent banking.
- Introduce new enhancements e.g. potentially payment status tracking and other.
A number of countries that constitute the US’s primary trading partners are in production with ISO 20022 or are in development, offering an opportunity to replicate and upgrade the levels of interoperability that exists today in high value payment systems through the use of the SWIFT MT standard. Major US trading partners now live with ISO 20022 in development include Canada, China, the Eurozone and Japan.
The Fed and TCH, in partnership with other industry groups (e.g. NACHA, ASC x9) are currently working on a variety of efforts to introduce ISO 20022.