Global Payments Systems in ISO 20022 Coexistence Period

ISO 20022 is designed to address these challenges and is becoming the global language for financial messaging. As a result, market infrastructures around the world are migrating to this new standard.

SWIFT responded to this change by announcing a migration of cross-border payment messaging, starting in November 2021 with a coexistence period, and completing by November 2025. Following community feedback, particularly following the Covid-19 pandemic, the migration will now start in November 2022 (the planned completion date of November 2025 is unaffected). In addition, SWIFT is introducing a Transaction Management Platform (TMP) that will assist migration.


5 Capabilities of the New SWIFT Transaction Management Solution

i. End-to-end transaction management

      ii. Instant and frictionless cross-border payments

      iii. Payment pre-validation

      iv. Data and financial crime services

      v. Solutions for SME and consumer sectors


ISO 20022 migration is happening across multiple payment infrastructures around the world and the complexity of managing multiple migrations, many of which are happening in the same timeframe, should not be underestimated.


Before and during the coexistence period, most high-value payment systems will migrate to the HVPS+ standard of ISO 20022 at different points in time. CHAPS in the UK will be one of the first market infrastructures in mid-2022 followed by Target2 and Euro 1 who intend to synchronize their migration with the enablement of MX messages on the SWIFT network in Nov 2022. The US payment system, Fedwire and CHIPS will follow a year later. 


Many other systems might only migrate at the end of the migration period or might even elect to stay on MT messages should cross border payments in their local currency play only a marginal role.


Banks who participate in multiple markets will need to actively monitor the migration plans for each market, particularly as it expected that there will be changes during the coexistence period.


The multiple changes to payment systems give participants a number of challenges. They might receive payment orders in MX but need to convert the incoming message and data elements into the local format, which might not have the same data richness. The subsequent truncation and loss of data fidelity are likely to lead to issues for some of the banks in the payment chain.


To address these issues early on, banks need to engage with their community, HVPS operator and SWIFT and explore ways to mitigate any data issues, including options associated with the new Transaction Management Platform. While local transactions can be conducted in a legacy format, any excess data can be made available via the TMP and this will allow a bank receiving the payment order in legacy format to access this for screening purposes.


However, it needs to be recognized that this bifurcated process can cause delays in applying the credit to the beneficiary or create operational risks in the screening process.


Here is the HVPS+ Global Migration Plan. 


The table provides - 

- Adoption approach by MI,  

- Migration Strategy

- ISO 20022 Version 

- Will the MI implement Structured remittance? Yes / No

Will the MI implement Structured Customer Data? Yes / No

- Market Requirements for Cross Border payments 

- HVPS+ Compliant (Yes/No) (1)- if No, how will MI address interoperability with X-Border Market


ISO 20022 HVPS+ Global Migration Plan and Strategy (Source PMPG)


To know more, speak to us. We at Nth Exception collaborate with Banks and Financial Institutions to analyze, solutionize, and optimize cross border payments processes.