Overview
All over the world, from November 2022, Payments messages in multiple domains are being upgraded from traditional MT / FIN format messages to MX / ISO 20022, driven by a combination of mandatory migrations enforced by Cross Border and Domestic scheme upgrades to the richer, more structured ISO 20022 message format, and new opportunities made available by rich payments meta data in ISO 20022.
While many banks and corporates are well on their way to upgrading traditional payments systems, arguably the first domain moving lock stock and barrel to MX, this change also has an impact on the Trade Finance ecosystem, immediately affecting the payment and reconciliation legs of different trade ecosystems that come together to reconcile a trade and confirm that it has been completed between an importer and exporter. The change however will not be restricted to commonly used Trade payments messages such as MT 103, MT 1xx, MT 2xx and MT 9xx series messages.
ISO 20022 messages and their adoption will facilitate automation of better end-to-end payments and trade-finance flows, reducing costs, streamlining the L/C process, Guarantees and moving to paperless transaction processing, accelerating the handling of document discrepancies.
ISO 20022 standardisation will support end-to-end payments and trade finance flows and enable commercial vendors to co-exist. Source: Swift – Digitising Trade Finance
ISO 20022 can also enhance liquidity and visibility on credit lines and improved payment methods such as Bank Payment Obligations (BPO).
