Existing payment standards are limited in the amount of remittance information they can support. The inability to exchange remittance information is viewed as an impediment to the greater adoption of electronic payments. As a result, businesses continue to rely on paper-based payment methods. The exchange of more remittance information with payments offers the potential for the automated reconciliation of incoming payments with outstanding invoices.

The adoption of ISO 20022 will introduce additional, as well as enriched, information to the payment process. By using ISO 20022, the essential remittance data can be added to payment message layouts as standardized fields. 

The capability to establish automated remittance reconciliation of payments between debtors and creditors, across accounts payable systems and accounts receivable systems, without manual intervention, will lead to optimized cash flows, improved financial forecasting.

Let us have a look at ISO 20022-based Payment Remittance Initiatives in Market Infrastructures.

ERI Illustration

Supported by the European Payments Council (EPC), the goal of the Single Euro Payments Association (SEPA) is to harmonize customer credit transfers and direct debits across 37 disparate EU communities. The EPC has developed SEPA payment schemes described in the SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) Rulebooks, using ISO 20022. 

The SCT schema supports the end-to-end carrying of optional remittance data in a structured or unstructured format, depending upon the specific requirements as an ‘Additional Optional Service’ (AOS) that can be offered as a value-added service by participant banks. It is estimated that more than 500 individuals and over 20 million corporations, as well as European public authorities, can make and receive euro payments through SEPA. 

The SWIFT for Corporates (SCORE) initiative harmonizes the implementation approach for large corporates for implementing ISO 20022 payments. SCORE aligns with CGI for both payments and additional remittance elements. 
In addition, the International Payments Framework Association (IPFA) interlinks Automated Clearing Houses (ACHs) across the world for cross-border ACH payments, using ISO 20022 as a common standard for mapping inbound and outbound traffic.


Finland has completed an ISO 20022 payments initiative, ACH Finland as a SEPA-compliant Clearing and Settlements Mechanism (CSM). ACH Finland now supports the SEPA SCT schemes, including the data formats which are based on ISO 20022 messages standard. ACH Finland also supports the optional remittance data used to provide structured remittance information for such processes as bundling of invoices and credit notes. 

United States 

In the U.S., the Federal Reserve and the National Automated Clearing House Association (NACHA) have conducted quantitative surveys to consider changes to their respective payments systems in the U.S. corporate marketplace. Similar to Canada, the studies revealed an increased demand for additional structured remittance data to enable more efficient processing and automated reconciliation. As a result, the Fedwire System and CHIPS introduced enhanced messaging layouts based on ISO 20022. 

In addition to containing all necessary data fields for payment and settlement, the new messages include remittance elements to explain the purpose of the payment. Based on customer requirements, a participating institution can choose from three methods of transferring remittance information to their customers, ‘unstructured’ (which allows originators to send beneficiaries a block of up to 9,000 characters of remittance data in a specified format supplied by the originator), ‘related’ (which contains a reference in the CTP to where the extended remittance information can be found, such as a URL address), or ‘structured’ (which allows originators to include the remittance data in predefined fields in the CTP messages).

The International Financial eXchange (IFX) Forum is an organization comprised of leading financial institutions, service providers, and software vendors dedicated to developing a messaging standard for financial services. In April 2014, the IFX Forum submitted two new messages to ISO for inclusion in ISO 20022. The ‘Remittance Advice’ message contains key elements pertaining to an associated payment, including discounts, disputed amounts, and invoice details. 
The ‘Remittance Location Advice’ message specifies the location, such as a trading partner’s or third-Party solution provider’s web site, where the remittance information can be found. 


In response to demands from corporates, the Common Global Implementation (CGI) initiative, seeks to agree on a common implementation of ISO 20022 in the corporate-to-bank payment cycle, in order to simplify implementation for corporate users and to promote wider acceptance of ISO 20022. 

CGI has examined the underlying local market requirements and created a CGI-MP (Market Practice) message template. This template contains the lowest common denominators for making a valid payment and allows for additional data elements to be passed between those banks and corporations that agree to support such a service. The initiative extends beyond corporations and banks to include application vendors, service providers, and market infrastructure organizations. 

The adoption of ISO 20022 by major markets around the world demonstrates that it is the strategic direction for payments globally. Financial institutions and their corporate clients. not only have the opportunity to design an efficient payment messaging format for domestic needs but to actively participate in the evolution of the global standard. 

The adoption of ISO 20002 and the implementation of Extended Remittance Information across the payments landscape are expected to support domestic commerce and create new opportunities for financial institutions, payment service providers, and businesses. 

We at Nth Exception focus on our clients' return of investment on ISO 20022 solutions and enable them to be competitive in the payments industry.