Cross-border payments involve more than just transferring money from one country to another. They encompass making transactions safe, efficient, and compliant with international regulations. This process includes transferring critical payment data securely. To achieve this, several checks and procedures must be in place before, during, and after the payment moves through the financial system.


Improvements in Cross-Border Payments


Significant advancements have been made in cross-border payments over the years. Notably, SWIFT's Global Payment Initiative (gpi), launched in 2016, has significantly increased the speed, transparency, and reach of these transactions. However, challenges persist, particularly due to the use of different and incompatible data formats in cross-border payment messages. These issues often lead to communication problems between payment systems, resulting in data loss and the need for manual intervention.


The Role of Standardized Data Formats and APIs


To address these challenges, the adoption of standardized data formats such as ISO 20022 and the use of APIs are highly recommended. These standards have the potential to streamline, improve, and automate cross-border payment processes. Payments Market infrastructures worldwide are rapidly adopting ISO 20022 as a common messaging standard, highlighting the increasing importance of technology in the payments industry.


The Future of Cross-Border Payments


As the payments industry evolves, the integration of standardized data formats and advanced technologies will continue to play a crucial role. By enhancing the efficiency, safety, and compliance of cross-border payments, these innovations promise to transform the global financial landscape.


Harmonized ISO 20022: A Key to Efficient Cross-Border Payments


The Committee on Payments and Market Infrastructures (CPMI) has emphasized the importance of adopting a harmonized ISO 20022 version to improve cross-border payments. This common message format can lead to significant efficiency gains by eliminating the need for workarounds and translations between different systems. This reduction in implementation costs for new Payment Service Providers (PSPs) enhances the capability to achieve fully automated straight-through processing. Consequently, the financial industry becomes more open, cost-effective, faster, and continuously available.


The Role of APIs and ISO 20022 in Modern Payment Systems


Recognizing these benefits, new payment providers are increasingly using APIs and ISO 20022 to deliver their services to banks and established financial institutions. This approach allows for faster growth compared to directly signing up end-users. APIs enable payment providers to integrate seamlessly with various services, managing different steps of cross-border payments such as sanctions screening, anti-money laundering checks, account validation, and payment routing.


Leveraging components from the existing ISO 20022 methodology


Leveraging ISO 20022 and APIs for Enhanced Cross-Border Payments


The Synergy of ISO 20022 and APIs


When combined, ISO 20022 and APIs offer substantial benefits to payment service providers, fintech companies, banks, corporations, and technology providers. These technologies can:


Provide Richer Data: By offering more context, they can send payments with itemized invoices, enhancing the clarity and detail of transactions.


Reduce Data Loss: They minimize data loss when payments move between different systems.


Increase Payment Visibility: Corporates gain greater visibility into their payments, knowing where funds are and when they will arrive, thus improving cash management.


Streamline Compliance Checks: They simplify Anti-Money Laundering (AML) checks, sanctions screening, and Know Your Customer (KYC) processes.


Optimize Service Use: Firms can use the best provider for each step in a modular way, rather than integrating all functions into a single complex system.


Enhance Automation: They boost automatic payment processing, reducing the need for manual intervention when issues arise.


In essence, the adoption of ISO 20022 and APIs is crucial for making cross-border payments faster, cheaper, and more transparent.


ISO 20022 Industry Deadlines and Transitions





Nth Exception: Your Partner in ISO 20022 Transition


If your institution is planning to adopt ISO 20022, Nth Exception, a SWIFT partner, is here to assist. As a specialist consultancy and technology firm, we work with financial institutions globally to implement best-in-class payment solutions.


Nucleus: Revolutionizing ISO 20022 Data Management


Nucleus, an ISO 20022 Data Fabric, is purpose-built to help banks and financial institutions monetize ISO 20022. It leverages rich ISO 20022 messages categorized by domain, scheme, and message version, and federates this rich data to internal systems, enabling large-scale change and disruption. Out of the box, Nucleus enables institutions to comply with CBPR+ and HVPS+ structured data requirements.


Key Features of Nucleus


  • Internalize the ISO 20022 data language and definitions.
  • Update systems to receive data as per ISO 20022 definitions.
  • Capture payments metadata from payment messages.
  • Extend rich contextual payments data to existing organizational systems that are not ISO 20022 native.


Key Benefits of Nucleus


  • Bridges the gap between legacy data platforms and ISO 20022.
  • Designed for financial institutions to accelerate value extraction from ISO 20022.
  • ISO 20022 native data store for pre- and post-translation messages: 10 years.
  • Structured address enablement.
  • LEI validation and creation.
  • Automated purpose and remittance codes.
  • Automated, independent truncation management.
  • Advanced analytics.
  • API native.
  • Available on-premise and in the cloud.

With Nucleus, your institution can seamlessly transition to ISO 20022, unlocking new efficiencies and capabilities in cross-border payments.


Reference Documents -

ISO 20022 and JSON: An Implementation Best Practices Whitepaper