A Global Standard to Modernise UK Payments
21 June 2018
Every year, over 8 billion payment messages are exchanged across CHAPS, Faster Payments and Bacs, the UK’s three main interbank payment systems. A consultation has been published which proposes a format for a new, common messaging standard to payments made in these systems.
These messages ensure businesses can pay their suppliers and staff, allow individuals to buy goods and services, support corporate treasury operations, and channel government spending and revenue.
Currently, each of the UK’s main payment systems uses a different ‘language’ (or messaging standard) to send information. These languages were developed at different points in time and in response to specific needs and helped to put UK infrastructure at the global leading edge in speed and resilience.
However, the demands on payment systems are changing rapidly, and the UK’s fragmented and restrictive messaging standards mean today’s systems are not best placed to respond. Inconsistent standards make it difficult and expensive to move customers’ payments seamlessly across domestic systems, complicate the management of operational outages, and pose barriers to competition and innovation by requiring new payments providers to develop bespoke technology to access each system.
Narrow messaging standards limit the amount of information that can be provided to support crucial business processes such as reconciliation and compliance, increasing costs for payment service providers and end-users. And a lack of harmonisation between the United Kingdom and other countries impedes the smooth transmission of cross-border payments.
The introduction of a common global messaging standard, known as ‘ISO 20022’ offers the opportunity to make payment systems work better for everyone. The Bank of England has committed to introduce ISO 20022 for the high-value payments system CHAPS. And the UK retail schemes moving to ISO 20022 was a key requirement of the Payment Systems Regulator (PSR) when it concluded its market review into an effective competition of central infrastructure services.
Adopting this global standard has the potential to deliver significant long-term benefits to the economy including increased interoperability, and richer and more structured information. The common, flexible design would help facilitate further innovation and competition in the payments industry; it would also improve back-office efficiency and resilience by aligning payments messaging both across the UK and internationally.
For more information, or to register your organisation to take part in the consultation, you can contact RTGSEngagement@bankofengland.co.uk or visit the Bank of England’s website to access the consultation on a new messaging standard for UK payments: ISO 20022.
The deadline for responses is Wednesday 18 July 2018, 5 pm.