The Bank of England has today, in conjunction with the New Payments System Operator (NPSO) and the Payment System Regulator (PSR), launched a 6-week consultation on the adoption of a common global ‘language’ or messaging standard, known as ‘ISO 20022’, for payments in the UK. The standard will be adopted across CHAPS, Faster Payments and Bacs, the UK’s three main interbank payments systems, which together process over 8 billion payments per year, with a total value of over £90 trillion.
In particular, the Bank has worked closely with the NPSO, the group responsible for the operation of Faster Payments and Bacs, to design a ‘Common UK Credit Message (CCM)’ – a standard message to be used across all three systems. The message has also been designed to be compatible with the overseas payment systems that are adopting the ISO 20022 global standard. This change is being enabled by the planned delivery of two major UK payment infrastructures, a renewed Real Time Gross Settlement (RTGS) for CHAPS payments, and the New Payments Architecture (NPA) for Bacs and Faster Payments.
Andrew Hauser, Executive Director at the Bank of England said: “The coordinated adoption of a single standard across UK payment systems should bring many benefits for payment providers, and for the businesses and households they serve. Risk will be reduced by allowing payments to be rerouted more effectively between systems, and by standardising and improving data supporting detection of fraud and financial crime. Payments will flow more easily across international borders.”
Implementing ISO 20022 will enrich the data carried in payments messages, improve compatibility across technology platforms and create opportunities for collaboration and innovation. Realising these benefits to the full, and preparing our payments systems for the future, will require material changes, for both payment providers and users of the system.
The consultation also covers the details of how this message will be implemented within CHAPS, including, what additional data will become mandatory. The Bank is not expecting to migrate CHAPS payments to ISO 20022 until 2021 at the earliest. Victoria Cleland, the new Executive Director for Banking, Payments and Financial Resilience will be leading this change as part of the wider RTGS Renewal programme.