How ISO 20022 Will Shape the Future of Payments

The ISO 20022 future of payments is not just about replacing one message format with another. It represents a foundational shift in how payment data is structured, exchanged, and leveraged across the financial ecosystem. By embedding rich, structured fields into every transaction, ISO 20022 enables faster processing, better compliance, and entirely new business models.

From Translation to Transformation

Many institutions still treat ISO 20022 as a translation exercise—converting MT messages to MX without improving upstream data quality. This approach limits the benefits.

The real transformation happens when financial institutions natively adopt ISO 20022, enabling:

• Real-time settlement with fewer manual interventions.

• Interoperability across domestic and cross-border payment systems.

• Smarter routing based on transaction context, cost, and speed.

Richer Data = Smarter Decisions

With fields for structured addresses, legal entity identifiers (LEIs), and payment purpose codes, ISO 20022 creates a single source of truth for payment metadata. This allows:

• Faster and more accurate sanctions screening.

• Automated compliance with FATF Travel Rule and local regulations.

• Precision in fraud detection through anomaly detection models.

ISO 20022 in Real-Time Payments & APIs

As instant payment schemes grow—FedNow (US), AANI (UAE), SEPA Instant (EU)—ISO 20022’s compatibility with API-based integrations becomes critical. Banks can provide real-time transaction insights to clients, enabling:

• Live liquidity forecasting for treasury teams.

• On-demand FX rate application at the point of payment.

• Embedded finance opportunities for corporate clients.

  
  

The Operational Reconciliation Challenge

Any TMS (Treasury Management System) morning starts with updating and reconciling the cash positions across accounts by a daily upload of electronic bank statements (MT 940, MT 942, etc.). This financial reconciliation focuses on balances and net credit/debit movements, helping treasurers build a picture of liquidity, dealing capital, and other daily requirements.

By contrast, ERP systems have to operationally reconcile—requiring more detailed information such as transaction references, remitter identification, and remittance data delivered by payment networks and banks.

Traditionally, this operational reconciliation is conducted separately for debits and credits on a statement:

• Debits from controlled payment runs can often be matched against ERP records with relative ease.

• Credits—incoming payments or cheques—are more challenging. Additional remittance data may arrive separately (e.g., free-format MT 199) and at different times than the statement itself.

Achieving a 3-way match between statement credit entries, remittance information, and open invoices is labour-intensive and time-consuming. In many cases, it requires advanced auto-reconciliation technologies, which bring their own set of challenges.

This is where ISO 20022’s Structured Remittance Information (SRI) becomes a game-changer—allowing end-to-end delivery of reconciliation data within the payment message itself, reducing the dependency on separate channels and manual matching.

The key challenges with the operational account reconciliation for a bank or corporate treasury process fall into four main categories:

Can ISO 20022 Solve These Challenges?

ISO 20022 brings significant potential to cross-border payments, cash management, and global trade—particularly because of the vast amount of structured transactional and remittance data exchanged between parties, often integrating with both ERP and Treasury Management Systems (TMS) at each end.

With over 400 message types covering every aspect of banking and financial services, ISO 20022 messages are grouped into business domains such as:

• Trade Services (tsrv)

• Cash Management (camt)

• Securities Trade (setr)

• Payments Initiation (pain)

These messages do more than define format—they standardize usage guidelines and business process flows between participants, ensuring clarity across the value chain.

The Power of CAMT.053

Among these standards, camt.053 plays a critical role in solving many reconciliation and reporting challenges. It is sent by the account servicer to the account owner (or an authorized party) to provide:

• Entries booked to the account.

• Balance information at a given point in time.

• Support for end-of-cycle statement reporting (daily, weekly, monthly, or yearly).

With 1,500+ data fields, camt.053 provides richer, more structured details than legacy MT formats—unlocking three key benefits:

1. Enhanced Data for Straight-Through Processing (STP)

• Transaction details are mapped to specific XML tags, reducing manual reconciliation exceptions and helping meet daily and month-end deadlines.

• End-to-End Identification (E2E) fields (e.g., invoice references, shipping dates) improve auto-match rates at both ends.

• Transaction fees can be mapped to the deducting party for precise internal accounting adjustments.

• For cross-border payments, details such as counter currency code, original amount, spot FX rate, and FX contract number allow automatic calculation of realized FX gain/loss—eliminating manual effort.

2. Enhanced Risk & Compliance

• Structured data improves watchlist screening and AML checks.

• Standardized compliance fields (e.g., Legal Entity Identifier (LEI), merchant IDs) strengthen regulatory reporting.

3. Enhanced Structure for Better Reporting

• Detailed opening/closing ledger balances and transaction summaries.

• Statement Pagination and Electronic Sequence Numbers for easy file ordering.

• Duplicate indicators to identify additional statements.

• Reporting source fields for account/department tagging.

Understanding the CAMT Family

• camt.052 – Bank to Customer Account Report: Intraday reporting (replacing MT942), offering near real-time account visibility.

• camt.053 – Bank to Customer Statement: Previous-day statements (replacing MT940) with detailed transaction data.

• camt.054 – Bank to Customer Debit/Credit Notification: Replaces MT900/MT910, giving debit or credit confirmations for specific transactions.

MT vs. CAMT – Choosing the Right Format

Arguments for CAMT.053:

• Separate fields for full reference and description, aiding automated reconciliation.

• Full details of batch payments (total + individual transactions).

• Consolidated feedback in a single XML file, simplifying processes and reducing maintenance.

Arguments for Retaining MT940:

• Batch-level details are sufficient.

• Systems cannot process large XML data volumes.

• MT940 delivery timelines better suit internal processes.

Opportunities Beyond Reconciliation

Expanding ISO 20022’s use across the financial supply chain unlocks value in payment processing, compliance automation, liquidity management, and FX optimization.

Summing Up

Payments standardization is not just compliance—it’s an opportunity to:

• Streamline reconciliation.

• Reduce operational risk.

• Improve client reporting.

• Enhance interoperability across markets.

However:

• The coexistence period will require handling both old and new formats.

• ERP/TMS systems may need upgrades—or middleware can bridge the gap.

ISO 20022 is a journey, not a destination. Institutions should work closely with technology partners to assess readiness, define an implementation roadmap, and capture the competitive advantages early movers will enjoy.

Our Expertise

Nth Exception is a SWIFT partner and ISO 20022 specialist, helping financial institutions and corporates:

• Navigate complex messaging standards and scheme requirements.

• Improve reconciliation, compliance, and operational efficiency.

• Deliver next-generation payment processing capabilities.

We combine deep payments expertise with technology integration skills—from structured data optimization to advanced analytics—to help you turn ISO 20022 adoption into a measurable competitive advantage.

Speak to us