Better data for better payments

The case for investment in ISO 20022

Third party toolkit, 2nd Edition

November 2020
Contents

How to use this toolkit

Summary narrative

Why ISO 20022?

How is ISO 20022 different?

Real-time treasury – Benefits in action

Reference graphics

Better data, better payments - The case for investment in ISO 20022 2
How to use this toolkit

ISO 20022 brings significant benefits to your clients’ payments experience, and creates new
opportunities for you.
 
To help you communicate the benefits and adoption requirements of ISO 20022, we have put
together this toolkit. You can use it with your product teams, sponsors, other internal
stakeholders and clients. They all need to understand why a change is required and
required now.
 
This toolkit provides reference material to make the case for better data in payments. While
ISO 20022 brings common and shared benefits, how it supports your business and clients will
be unique. Adapt this content to tell the ISO 20022 story in your own terms.

Better data, better payments - The case for investment in ISO 20022 3
 Summary narrative

The summary The payments ecosystem continues to rapidly change All reserve currencies and over 14 high value payment
provides a and evolve. This is being driven by increasing pressure systems will adopt ISO 20022 in the next five years.
compact but from regulators, intense competition from new entrants SWIFT also will introduce a coexistence period for ISO
complete and by customers who now expect payments to be 20022 and current SWIFT MT standards for cross-border
overview instant, frictionless and account-to-account. payments from November 2022 to November 2025.
of the ISO 20022
story. To address these challenges and meet the needs of our Adopting this new payments language will require
clients, a modern, structured, open and pervasive investment.
It can be used in payments language is now required.
its entirety or as a Those that make a strategic plan for better payments
boilerplate, That standard language is ISO 20022. data, and leverage their investment for better client
overview or payments experience will benefit from this change.
introduction ISO 20022 is more than a technology investment. It will
to ISO 20022. provide more remittance information to improve The next generation of instant, efficient and reconciled
reconciliation for clients; make payment processing payments is at hand.
faster with consistent and structured data across the
end-to-end payment chain; and improve efficacy of
compliance controls with all payment actors identified
with granular details.

Better data, better payments - The case for investment in ISO 20022 4
Why ISO 20022?

Better data, better payments - The case for investment in ISO 20022 5
Limited and unstructured data results in a poor payment experience for clients
For example:
Unstructured data
• Requires multiple institutions to repeatedly interpret
MT 103, Field 50 Ordering
Customer
9/21/21 9/21/21 ambiguous and incomplete data, with 10% of payments
requiring manual interventions, delaying crediting of
funds to clients

9/21/21
9/21/21 Limited data
9/21/21 9/21/21 9/21/21
• Limited space for remittance information requires
customers to exchange data separate from payments and
implement costly and time consuming reconciliation

• Limited space to identify all parties and their details in the

payment chain
MT 103, Field 59 Beneficiary
9/21/21 9/21/21
Customer • prevents consistent identification of ultimate
parties, further complicating reconciliation
• reduces efficacy of compliance controls

• Limited space for regulatory reporting data requires clients

9/21/21
9/21/21 to manually or separately provide necessary information,
9/21/21 9/21/21 9/21/21 reducing speed and efficiency of payments

Better data, better payments - The case for investment in ISO 20022 6
ISO 20022 will provide consistent, rich and structured data across the payments chain

Client Domestic payments Correspondent banking Domestic payments Client

ISO
ISO ISO
ISO ISO
ISO ISO
ISO ISO
ISO

Ultimate Debtor Debtor MI Intermediary Intermediary Intermediary MI Creditor Creditor Ultimate

Debtor Agent & MI & MI Agent Creditor
& MI participant participant & MI
participant participant

• High value payment systems for all reserve currencies • ISO 20022 provides several features, to improve
either use or are in process of migrating to ISO 20022 payment automation and compliance, and enable
new client services
• ISO 20022 is the standard of choice for all next
generation Instant Payment systems • A consistent data model across the entire
payments chain, reducing ambiguous data
• By 2025 80% of all currency settlement is estimated to
use ISO 20022 • 10x more space than SWIFT MT, with ability to
carry rich and structured remittance information,
Better data, better payments - The case for investment in ISO 20022
party details and regulatory reporting 7
ISO 20022 brings new capabilities

ISO 20022
Consistent,
Rich data end to end

Rich rails
Right the Structured &
first time meaningful

Better data, better payments - The case for investment in ISO 20022 8
ISO 20022 enables a better client experience

ISO 20022
Interoperable across Rich customer
payment schemes experience
A single, consistent payment language Rich remittance data end-to-end for
across domestic, cross-border and client clients to speed reconciliation and
channels, extensible and future proof working capital management

Rich rails

Better compliance Efficiency

Complete record of payment parties, Rich, structured, mandatory data from
agents and their identification, enabling source will reduce manual
Payments on Behalf Of (POBO), interventions, improve efficiency and
and better compliance speed of payment processing

Better data, better payments - The case for investment in ISO 20022 9
How is ISO 20022 different?

Better data, better payments - The case for investment in ISO 20022 10
 ISO 20022: A recipe for making financial messaging standards

Business model

Message model

Syntax

A methodology to develop An open, neutral and global Syntax independent

common financial messaging standard, freely business model, commonly
standards, based on a implementable by anyone implemented in XML and
business dictionary and supported by an open may be represented in any
governance process other future format including
JSON for APIs

Better data, better payments - The case for investment in ISO 20022 11
 Rich, structured data
How is ISO 20022 different from current SWIFT MT? More space for meaningful client information

MT103, Single Customer Credit Transfer pacs.008, FI To FI Customer Credit Transfer

{1:F01ABNANL2AAXXX1234012345} <?xml version="1.0"?>
{2:O1031511010606UBSWCHZHGXXX00000130850105141149 <Document xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"
S} xmlns="urn:iso:std:iso:20022:tech:xsd:pacs.008.001.08">
{3:{108:UHBMT103001}{121:360f1e65-90e0-44d5-a49a- <FIToFICstmrCdtTrf>
92b55eb3025f}} <GrpHdr>
{4: <MsgId>494931/DEV</MsgId>
:20:494931/DEV <CreDtTm>9999-12-31T00:00:00</CreDtTm>
:23B:CRED <NbOfTxs>1</NbOfTxs>
:32A:090828EUR1958,47 <SttlmInf>
:33B:EUR1958,47 <SttlmMtd>INDA</SttlmMtd>
:50K:/122267890 </SttlmInf>
BIODATA GMBH </GrpHdr>
HOCHSTRASSE, 27
<CdtTrfTxInf>
8022-ZURICH
<PmtId>
SWITZERLAND
<InstrId>494931/DEV</InstrId>
<InstrId>494931/DEV</InstrId>
:59:/502664959
H.F. JANSSEN LEDEBOERSTRAAT 27 <TxId>NOTPROVIDED</TxId>
AMSTERDAM <EndToEndId>NOTPROVIDED</EndToEndId>
<EndToEndId>NOTPROVIDED</EndToEndId>
:71A:SHA <UETR>360f1e65-90e0-44d5-a49-a92b55eb3025f</UETR>
</PmtId>
…
</CdtTrfTxInf>

Rich, structured, Customer can send

Field 20 Sender’s Reference is limited to 16 characters
logically grouped • 35 characters in Message Identification element
data • 16 characters in Instruction Identification element (for
backward compatibility)
Note: These illustrations are based on the 2020 versions of the CBPR+ • 35 characters in End To End Identification element 12
Usage Guidelines. Please check for current CBPR+ payment specifications
on MyStandards • 35 characters in Transaction Identification element
 Rich, structured data
How is ISO 20022 different from MT? More space for interbank data for faster settlement

MT103, Single Customer Credit Transfer pacs.008 v8, FI to FI Customer Credit Transfer
Embedded code list
71A Details of Charges Credit Transfer Transaction Information [1,1]
Code Charge Bearer [1,1]
Beneficiary [BEN] Borne By Creditor [CRED]
Our customer charged [OUR] Borne By Debtor [DEBT]
Shared charges [SHA] Shared [SHAR]

pacs.004 v9, Payment Return

Embedded codes • Codes can be embedded Externalised code list
are strictly defined or externalised from the
Externalised Transaction Information [1,1]
in the message and definition of the Return Reason Information [1,1]
limited to global and flexible code message, making code Reason [1,1]
definitions, making definitions maintenance and Code [1,1]
them limited, rigid updates easier
and difficult to • Proprietary codes are
maintain ExternalReturnReasonCode Component
also supported, allowing
customers to bilaterally IncorrectAccountNumber [AC01]
agree on codes between
them InvalidCreditorAccountNumber [AC03]

ClosedAccountNumber [AC04]
Note: These illustrations are based on the 2020 versions of the CBPR+
BlockedAccount [AC06] 13
Usage Guidelines. Please check for current CBPR+ payment specifications
on MyStandards …
 Rich, structured data
How is ISO 20022 different from MT? Full party details for better compliance controls

MT103, Single Customer Credit Transfer pacs.008, FI To FI Customer Credit Transfer

{1:F01ABNANL2AAXXX1234012345} <?xml version="1.0"?>
{2:O1031511010606UBSWCHZHGXXX00000130850105141149S} <Document xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"
{3:{108:UHBMT103001}{121:360f1e65-90e0-44d5-a49a-92b55eb3025f}} xmlns="urn:iso:std:iso:20022:tech:xsd:pacs.008.001.08">
{4: <FIToFICstmrCdtTrf>
:20:987654321/DEV …
:23B:CRED <CdtTrfTxInf>
:32A:011521USD10551,50 …
:33B:USD10551,50 <Cdtr>
:50K:/122267890 <Nm>Cuba Sports<Nm>Cuba
Bar &Sports Bar & Grille</Nm>
Grille</Nm>
BIODATA GMBH <PstlAdr> <PstlAdr>
HOCHSTRASSE, 27 <StrtNm>Ocean Drive</StrtNm>
<StrtNm>Ocean Drive</StrtNm>
8022-ZURICH <BldgNb>1234</BldgNb>
<BldgNb>1234</BldgNb>
SWITZERLAND <PstCd>90099</PstCd>
<PstCd>90099</PstCd>
:59:/1234567890
:59:/1234567890
<TwnNm>Los Angeles</TwnNm>
MR. CUBA
CUBA GOODING
SPORTS JR.
BAR GRILLE <CtrySubDvsn>CA</CtrySubDvsn>
<CtrySubDvsn>CA</CtrySuDvsn>
1234 OCEAN
OCEAN DRIVE
DRIVE <Ctry>US</Ctry>
<Ctry>US</Ctry>
90099 LA </PstlAdr>
</PstlAdr>
:71A:SHA …
</Cdtr>
<CdtrAcct>
<Id>
<Id>1234567890</Id>
<Othr>

Unstructured and ambiguous Beneficiary </Othr>

Customer details, e.g. “Cuba” in beneficiary Structured, </Id>
name can be confused with a sanctioned country unambiguous </CdtrAcct>
data
Structured and labelled data brings
Note: These illustrations are based on the 2020 versions of the CBPR+
Usage Guidelines. Please check for current CBPR+ payment specifications clarity to the message and enables 14
on MyStandards accurate and efficient screening
Real-time treasury –
Benefits of better data in action
The CoffeeCo Example

Better data, better payments - The case for investment in ISO 20022 15
The CoffeeCo example

Based in London, Average cost for a pallet of

CoffeeCo is a boutique 12 x 10 kg bags of Robusta
coffee bean importer, coffee costs 12,000 USD to
roaster and distributor. import.

CoffeeCo imports In order to avoid transaction

premium Robusta beans costs, CoffeeCo would like to
CoffeeCo from South East Asia. aggregate multiple invoice
payments to its suppliers.
Suppliers insist on USD
denominated payments to
UK branches of their local
banks.

Better data, better payments - The case for investment in ISO 20022 16
Open invoices and credit notes from CoffeeCo’s
prime supplier in Sumatra, Indonesia

Invoice Number: 20200130-1072-01

$12,000

Invoice Number: 20200210-2084-01

$24,000

Invoice Number: 20200417-4214-01 One of the bags of

$12,000 coffee was not shipped,
so only $10,800 to be
Invoice Number: 20200530-5044-01 paid
$12,000

Credit note: 20200315-4365-CN

$7,500

Better data, better payments - The case for investment in ISO 20022 17
CoffeeCo’s open invoices get paid by means of a serial payment flow

The MT way

MT 101
A MT 103 B MT 103 C MT 910
MT 900

CoffeeCo, Ordering Intermediary Account with Indonesian Supplier,

Ordering Customer Institution Institution Institution Beneficiary customer

The ISO 20022 way

pain.001
A pacs.008 B pacs.008 C camt.054
camt.054

CoffeeCo, Debtor Agent Intermediary Creditor Indonesian Supplier,

Debtor Agent Agent Creditor

Better data, better payments - The case for investment in ISO 20022 18
ISO 20022 provides CoffeeCo a rich dictionary for Structured Remittance Data

Pay against invoices

MT 101 and 103 ISO 20022 pain.001 and pacs.008

:70:P1002/Payment of pallet invoices - <Purp>
Dedicated field for
20200130-1072-01/20200210-2084- <Prtry>P1002</Prtry>
Payment Purpose Code,
</Purp>
01/20200417-4214-01/20200530-5044- <RmtInf>
required by Indonesian
Regulator
01/ Credit note: 20200315-4365-CN <Strd>
<RfrdDocInf>
<Tp>
Code to show payment is
<CdOrPrtry>
against a “Commercial
Limited to 4 lines
<Cd>CINV</Cd>
INVoice”
of 35 characters
</CdOrPrtry>
</Tp>
Free form text Buyer’s unique reference to
<Nb>20200130-1072-01</Nb>
that ERP and the invoice in their ERP
</RfrdDocInf>
bank apps have
<CdtrRefInf>
to interpret
<Tp>
<CdOrPrtry>
<Cd>SCOR</Cd>
Supplier’s unique
</CdOrPrtry> Structured
</Tp> COmmunication
<Ref>PAY1245ABC</Ref> Reference of the invoice
</CdtrRefInf>
Structured element of
</Strd> Remittance Information
<Strd>… is repetitive and can
Note: These illustrations are based on the 2020 versions of the CBPR+ contain multiple
19
Usage Guidelines. Please check for current CBPR+ payment specifications documents
on MyStandards
ISO 20022 provides CoffeeCo a rich dictionary for Structured Remittance Data

Refer to credit notes

MT 101 and 103 ISO 20022 pain.001 and pacs.008

:70:P1002/Payment of pallet invoices - …
20200130-1072-01/20200210-2084- <Strd>
<RfrdDocInf>
01/20200417-4214-01/20200530-5044- <Tp>
01/ Credit note: 20200315-4365-CN <CdOrPrtry>
Code to show a “CREdit
<Cd>CREN</Cd>
Note” is applied
</CdOrPrtry>
</Tp>
Limited to 4 lines
<Nb>20200315-4365-CN</Nb>Credit note reference
of 35 characters number in Debtor’s ERP
</RfrdDocInf>
<RfrdDocAmt> Credit note amount
Free form text <CdtNoteAmt>USD7500</CdtNoteAmt>
that ERP and </RfrdDocAmt>
bank apps have
<CdtrRefInf>
to interpret
<Tp> Supplier’s unique
<CdOrPrtry> Structured
<Cd>SCOR</Cd>
COmmunication
</CdOrPrtry> Reference of the
</Tp> credit note
<Ref>CredNote12345</Ref>
</CdtrRefInf>
</Strd>

Note: These illustrations are based on the 2020 versions of the CBPR+
20
Usage Guidelines. Please check for current CBPR+ payment specifications
on MyStandards
ISO 20022 provides CoffeeCo a rich dictionary for Structured Remittance Data

Adjust an invoice payment with clarification

MT 101 and 103 ISO 20022 pain.001 and pacs.008

:70:P1002/Payment of pallet invoices - …
20200130-1072-01/20200210-2084- <Strd>
<RfrdDocInf>
01/20200417-4214-01/20200530-5044- <Tp>
01/ Credit note: 20200315-4365-CN <CdOrPrtry>
<Cd>CINV</Cd>
</CdOrPrtry>
</Tp>
Limited to 4 lines
<Nb>20200417-4214-01</Nb>
of 35 characters
<LineDtls>
<Id>
Free form text Second Line Item from
<Nb>002</Nb>
invoice
that ERP and </Id>
bank apps have Line Item Description
<Desc>Robusta Grade 3, January 2020
to interpret on invoice
shipment</Desc>
<Amt>
Adjusted amount
<AdjstmntAmtAndRsn>
<Amt>USD1200</Amt>
<CdtDbtInd>DBIT</CdtDbtInd>
Reason for adjustment
<Rsn>SVNR</Rsn>
</AdjstmntAmtAndRsn>
</Amt>
</LineDtls>
Note: These illustrations are based on the 2020 versions of the CBPR+ …
21
Usage Guidelines. Please check for current CBPR+ payment specifications
on MyStandards
The CoffeeCo example

Within a single
payment instruction,
CoffeeCo can:
CoffeeCo
• Pay all outstanding
invoices all without
• Apply a credit note
a single
phone call
• Contest a specific line item
on an invoice
or email.
To open this use case in video format, right cli
ck here and select ‘Open Hyperlink.’

Better data, better payments - The case for investment in ISO 20022 22
Banks can use this rich data to provide a next generation of reconciliation
and treasury services

Pending reconciliation Outstanding invoices Pending approval by debtor

9/21/21
9/21/21 Credit note adjustment
Vendor 1 76,231.91 EUR
9/21/21 Disputed

Vendor 2 56,981.45 USD

Vendor 3 42,124.78 USD

EUR 73,609.56

Vendor 4 31,873.21 GBP

18,402 22,082.87 33124.30
9/21/21 9/21/21 9/21/21 9/21/21 9/21/21 9/21/21 9/21/21
Vendor 5 25,782.02 GBP

Average time to get paid Amount paid Vendor 6 5,782.02 USD USD 103,672.91

23 days 103,781.96 … 139,531.65 EUR 41,469.16 36,285.52 25,918.23

EUR

GBP 91,451.93

9,145.19 45,725.97 36,580.77

Better data, better payments - The case for investment in ISO 20022 23
Where can I find out more?

ISO 20022 Programme hub ISO 20022 in bytes newsletter

WWW The ISO 20022 Programme Subscribe by adding “ISO 20022” to your interests
Document Centre now includes: under the “Standards” category
• ISO 20022 for Dummies e-book
• Customers insights
• Corporate case study
• Past webinar recordings

SWIFTSmart
The SWIFTSmart e-learning platform includes
training modules for
• Introduction to ISO 20022 and Standards
• CBPR+ message flows and attributes
• Exchange messages over FINplus

Better data, better payments - The case for investment in ISO 20022 24
What do I do now?

1. Subscribe to the ISO 20022 in bytes newsletter. Go to swift.com > News & Events >
Subscribe to SWIFT insights to stay updated by adding “ISO 20022” to your interests
under the “Standards” category.

2. Access ISO 20022 training on SWIFTSmart.

3. Share this toolkit will your product teams, sponsors, other internal stakeholders and your
clients. They all need to understand why a change is required and required now.

Better data, better payments - The case for investment in ISO 20022 25
Reference graphics
You can use the following graphics, logos and icons to construct your own
client story or adapt as needed.

Better data, better payments - The case for investment in ISO 20022 26
Logo

Better data, better payments - The case for investment in ISO 20022 27
Icons Labels serve as initial meaning but can be adapted to the context

Use
Icons can have multiple
meanings, as long as they
are shown in a different
context. Labels act as the
definition of the icon.
Statement Listing File
account

Customer Trader Broker

Better data, better payments - The case for investment in ISO 20022 28
Icons Labels serve as initial meaning but can be adapted to the context

Compliance Fraud control End to end Global business Global Community Compliance

Scalable Secure Processes and data KYC Sanctions Compliance Structured data
compliance analytics

Transparent Data Standardisation Centralisation Phone Printer Fax

Better data, better payments - The case for investment in ISO 20022 29
Icons Labels serve as initial meaning but can be adapted to the context

£££ $$$ ₹₹ ₹
Market Gpi Direction Reducing costs Reducing costs Reducing costs
infrastructure tracker & optional

¥¥¥
Cloud Translation Global Reducing costs Reducing costs

Flag Exceptional Cloud 2 Statement/ Statement

Better data, better payments - The case for investment in ISO 20022 Listing/ account owner 30

File
 Icons Labels serve as initial meaning but can be adapted to the context

Bank Corporate Process agent Central Other

depository

$
$

Bank Central Financial Stock Authority Dollar processing

Institutions Exchange bank

Better data, better payments - The case for investment in ISO 20022 31
Icons Labels serve as initial meaning but can be adapted to the context

Any person Debitor Man with phone Authorized

Creditor Dealer Authority

Meeting

Better data, better payments - The case for investment in ISO 20022 32
Icons Labels serve as initial meaning but can be adapted to the context

MT
Message MT Key Encryption

Encrypted Key pair Decryption

Decrypted Hardware Certificate / Authority

key

Signed
Better data, better payments - The case for investment in ISO 20022 33
 www.swift.com

Contact your account manager

or contact us at ISO20022programme@swift.com
if you have any questions