ISO 20022 in Canada

ISO 20022 is a new worldwide and open payment messaging standard. It establishes a global standard for payment data by creating a uniform language and paradigm. One that generates higher-quality data than other standards, resulting in higher-quality payouts for everyone. One that is adaptable to changing demands and techniques. Anyone in the industry can use ISO 20022 in Canada, and it can be implemented on any network. This blog will provide you with more information on ISO 20022 in Canada.

ISO 20022 in Canada

About ISO 20022 in Canada

ISO 20022, is an international standard for electronic message exchange between financial organizations. ISO 20022 was designed in 2004 to provide a common platform for the financial industry to build messages using a modeling technique, a central vocabulary, and a set of XML and ASN.1 design guidelines.

Is ISO 20022 in Canada Mandatory?

Migration to ISO 20022 in Canada is not required by law, but those that do not take action now risk being shut out of international payment systems.

What Organizations can Implement ISO 20022 in Canada?

Any organization, regardless, of size or location, that is involved in financial activities can benefit from implementing ISO 20022 in Canada. This includes organizations such as banks, credit card companies, and other financial institutions. ISO 20022 mostly applies to financial companies who wish to reduce their communication infrastructure and expenses by using a single, standardized “language” for all financial conversations, regardless of the business domain, communication network, or counterparty.

The ISO 20022

ISO 20022 messages and their components are stored in a central financial repository, which is described in the standard. The ISO 20022 standard is divided into eight sections:

  • Metamodel
  • UML profile
  • Modeling
  • Creating an XML Schema
  • Reverse engineering
  • Characteristics of Message Transport
  • Enrollment
  • ASN.1 generation

What Should Banks do to Prepare for Implementation of ISO 20022 in Canada?

  • One of the first priorities for banks will be to undertake a thorough audit of their payment infrastructure and determine their payment processing capabilities. Starting their relocation process as soon as possible will ensure a smooth transfer.
  • In comparison to traditional legacy formats, ISO 20022 requires the processing of substantially higher data quantities. For real-time payments, daily liquidity management, compliance checks, and fraud detection and prevention, bank systems and databases will need to be capable of handling these bigger volumes at quicker speeds.
  • It’s critical to allow adequate time for testing to ensure that all syntax and formatting information is proper, as well as that the data is appropriately mapped inside the linked payment and clearance systems.
  • All elements of an address will need to be stored in distinct fields in the future for proper implementation of ISO 20022. Customer address information, for example, was designed to be stored in an unstructured manner by legacy payment systems prior to ISO 20022.
  • It’s critical for banks to keep their corporate clients informed about the additional data that may become available and how it will be used. Those clients should also be thoroughly informed and included in the end-to-end testing process.

Benefits of Adopting ISO 20022 in Canada

The following are some of the benefits of ISO 20022 in Canada:

Data that is richer, better organized, and more granular: ISO 20022 allows for the end-to-end transmission of richer, better structured, and more detailed data in payments messages.

Payments are made on the basis of quality data: Customers will benefit from increased transparency and remittance information, which will result in better customer service. In addition, customers will have a better experience.

Less manual intervention and improved analytics: Improved analytics, less manual intervention, more accurate compliance processes, higher resilience, and improved fraud protection measures are among the other operational benefits.

End-to-end automation is supported: ISO 20022, a single standard that encompasses all business domains and end-to-end business processes, makes it easier to develop new services and improve straight-through processing.

Adapting to the latest technology: ISO 20022 makes use of current, mainstream XML technology that is widely supported and promotes effective integration.

Adoption on a global scale: For payments and securities transformation projects, around 200 market infrastructure-driven efforts have either implemented ISO 20022 or are contemplating doing so.

ISO 20022 in Canada: Is it Worth It?

ISO 20022 is becoming a more widely used global standard for payment messaging. It is already used by payment systems in more than 70 countries, and it will become the de facto standard for high-value payment systems of all reserve currencies in the future years, covering 80% of global volumes and 87 percent of the transaction value. Users will be encouraged to construct business transactions and message models using a globally agreed-upon approach, as well as transition to a common language and set of syntaxes, all thanks to the ISO 20022 framework.

ISO 20022 greatly enhances the quality of data throughout the payments ecosystem by establishing a uniform language and model for payments data. New customer experiences will be enabled by richer, structured, and meaningful data, while compliance and efficiency will be improved. Overall, ISO 20022 is adaptable enough to meet today’s and tomorrow’s needs.

Contact IAS today to learn more about ISO 20022 in Canada, or visit our ISO 20022 in Canada frequently asked questions page!