Understanding the Importance of Structured Data in Payments
- Akhil Rao
- Aug 19
- 3 min read
Updated: Nov 3
ISO 20022 isn’t just another messaging standard. It’s a regulatory mandate reshaping cross-border and high-value payments. Beyond syntax, its power lies in structured, validated data that makes payments traceable, auditable, and compliant.
The Core Data Elements
Three data points sit at the heart of this shift:
Legal Entity Identifiers (LEIs)
Payment Purpose Codes (PoPs)
Structured Addresses
Failure to adopt them won’t just mean non-compliance. It will lead to failed payments, regulatory breaches, and costly investigations.
1. What is an LEI — and Why It Matters?
The Legal Entity Identifier (LEI) is a unique, 20-character alphanumeric code that identifies legal entities in financial transactions.
Introduced by the Global LEI Foundation, LEIs are now mandatory in CHAPS payments by May 2025.
Without an LEI, cross-border payments risk rejection at the clearing stage.
Example Scenario
A corporate sends a high-value GBP payment without including its LEI.
The payment is flagged by the receiving bank’s AML filter.
Result: delayed settlement, manual investigation, and reputational impact.
2. Payment Purpose Codes: Unlocking Compliance and Analytics
Payment Purpose Codes (PoPs) classify why a transaction is taking place (salary, trade settlement, investment, tax, etc.).
Why It Matters
Regulators demand granular visibility to combat money laundering and fraud.
Banks need analytics-ready data for reporting and monitoring.
Corporates benefit from cleaner reconciliation and automated postings.
Regulatory Milestone
CHAPS mandates PoP codes by May 2025, making them non-negotiable for corporates and banks alike.
3. Structured Addresses: From Unstructured Strings to Regulatory-Grade Data
In today’s MT messages, addresses are often free-text fields. ISO 20022 requires structured, machine-readable addresses split into fields (Street, City, Postcode, Country).
Why It Matters
Eliminates data truncation (no more lost fields when converting MT to MX).
Enables faster sanctions screening (matching against lists requires precise data).
Improves fraud detection by linking accurate addresses to entities.
Regulatory Milestone
Structured Addresses become mandatory by November 2026 under CHAPS.
ISO 20022 Readiness Checklists
CHAPS May 2025 — LEI + Payment Purpose Codes
✅ Register for a Global LEI via GLEIF-accredited providers
✅ Update ERP and treasury systems to capture LEI fields
✅ Configure payment templates to include mandatory PoP codes
✅ Train staff to classify transactions accurately
CHAPS November 2026 — Structured Addresses
✅ Audit all current payment files for unstructured addresses
✅ Update systems to map Street, City, Postcode, Country fields
✅ Validate addresses against regulatory lists (e.g., OFAC, HM Treasury)
✅ Test address truncation in legacy MT to MX conversions.
The Time to Act is Now
ISO 20022 isn’t a distant horizon. The deadlines are hardwired into May 2025 (LEI + PoP) and November 2026 (Structured Addresses). Banks and corporates who delay risk failed payments, increased manual intervention, and regulatory penalties.
By preparing today, you not only ensure compliance but unlock data-driven benefits — from richer analytics to faster reconciliation.
👉 At Nth Exception, we help corporates and banks implement structured ISO 20022 data fields without friction.
Conclusion: Embracing the Future of Payments
The transition to ISO 20022 is not merely a compliance exercise; it is an opportunity to enhance operational efficiency and customer satisfaction. By adopting these structured data elements, organizations can streamline their payment processes and reduce the risk of errors.
Take Action Today
Start your journey towards compliance and operational excellence. Review your current systems and processes. Ensure that you are ready for the upcoming deadlines. The future of payments is structured, and the time to act is now.
