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ISO 20022 Timeline for Retail Payments: Don’t Miss the Next Deadline!

Steve Gilde November 2, 2023
ISO 20022 Timeline for Retail Payments: Don’t Miss the Next Deadline!

The Capgemini Research Institute publishes a number interesting papers for the financial services community, including a series titled the World Payments Report. In the 2022 edition of this document, the ISO 20022 messaging standard is described in glowing terms:

“ISO 20022 is a global open standard that creates a common language for payments worldwide and will help banks significantly improve data-related issues. It lays the groundwork for payment harmonization, calibration and utilization of new efficiency potentials. It will ensure transparency, accuracy, compliance and relevance.”

Since its introduction back in 2004, many have recognized the potential that ISO 20022 has to revolutionize the payments industry by delivering enriched transactional data, enabling more robust fraud controls, improving behavioral predictions and optimizing payment processes. In a nutshell, ISO 20022 can bring significant value to financial services providers that process any type of payment.

Unfortunately, in its 2023 version of the World Payments Report, the following update on ISO 20022 is provided:

“We surveyed payments executives regarding their approach to the ISO 20022 migration:

- 44% said they were in the final phase or had completed their migration project
- 25% said their ISO20022 migration is in process
- 27% said they are yet to start the ISO20022 migration journey.”

Given the significant benefits that ISO 20022 promises to deliver, what is behind the delay in adoption within the corporate banking sector, with so many institutions risking fines and penalties, as well as the potential impact to their brand reputation? And what lessons can we learn from the current situation that will help with the eventual migration for the retail payment industry?

 According to the previously cited 2023 edition of the Capgemini World Payments Report:

“Since 2022, a steep rise in inflation, rising interest rates, tumbling stock markets, waning consumer confidence, supply chain disruptions and escalating geopolitical crises have affected global commerce.

Managing the volume, velocity and variety of simultaneous changes comes at a cost for banks and payment processors, especially when revenue sources are under pressure.  The payment executives surveyed indicate that nearly 80% of traditional revenue sources are stressed. In parallel, costs related to regulatory compliance, scheme implementation (including ISO2022) and payments modernization leave limited resources to invest in innovation.”

Michael Knorr, CIB Industry and Advisory Lead at Wells Fargo, as published by, “2023 is a big year for ISO 20022”, makes the following observation:

“…untangling the web of legacy processing data sets and satellite systems is a heavy lift” for everyone in the industry. It’s a multi-year effort to prepare these systems and move to a standard that aligns closely with ISO 20022.”

A senior project delivery executive for IBM, Seema Kohli offers this observation in her June 28, 2023 blog ISO 20022 in the Payments World!:

“While the benefits can be termed transformative, the road to transform is a complex one. With ISO 20022 fast becoming the global payments messaging standard, the industry is faced with a massive migration effort.

Banks/FIs and PMIs will need to migrate their systems and applications to align with the new standard. This needs significant investment of time and money as well as preparation for a well-thought out migration strategy.”

What The Data Tells Us

#1 - The migration to ISO 20022 is a complex process that requires significant changes to existing systems and processes. This is a challenge for banks that have complex payment processing infrastructures consisting of legacy systems, applications and networks.

#2 - Many banks are not ready for the migration due to a lack of preparation, resources, or expertise. Some banks may have underestimated the complexity of the project, while others may have delayed their preparations.

#3 - Unexpected challenges such as the COVID-19 pandemic, global economic unrest, surging inflation and high interest rates, have disrupted migration plans for many organizations, negatively impacting their original timelines.

#4 - The cost of migration is another challenge for many banks. Some banks may not have the budget to fund the migration, while others may be reluctant to invest in a project that does not offer immediate returns.

Preparing for the Retail Payment Industry Migration 

The ISO 20022 standard also holds significant promise for the retail payment industry, especially in scenarios where organizations are able to leverage earlier investments to further harmonize payments data and processes. 

However, it is important to note that many of the same challenges that impacted the corporate banking migration will also exist for retail payment processors.

Some things for retail bankers to consider as they contemplate the journey toward ISO 20022:

  • Begin your planning as early as possible by gathering as much information as you can about ISO 20022 from industry sources like ISO, NEXO, your partners and processors, etc.
  • Inventory your current systems and applications to understand the scope of what will be impacted by the ISO 20022 migration.
  • Start working on a plan that will provide high-level estimates for the overall migration effort, the cost and the resources required.
  • Collaborate within your organization and across the payments industry with others who have gone through the ISO 20022 migration process for corporate payments.
  • Stay in tune with industry updates, card brand and network bulletins, as well as any legal and regulatory changes that may impact your migration activities.

Interested in learning more about the ISO 20022 migration and how Paragon Application System’s range of automated payment testing solutions can help you achieve your migration goals? Reach out to our team today.

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