Integrating ISO 20022: Adopting the Worldwide Payments Messaging Standard in CHAPS and RTGS Systems

The UK Bank’s Real Time Gross Settlement System (RTGS) and CHAPS moved to the ISO 20022 communications standard on June 19, 2023. Many advantages will result from transmitting improved data in a more structured and richer format than is currently possible, thanks to the ISO 20022 message standard

It is an open international standard that could lead to the creation of a single, universal language for the majority of payments made worldwide. Apart from the UK, other major regions are also putting ISO 20022 into practice before November 2025, the date SWIFT is expected to discontinue its current MT messaging standard for payments.

After June 19, 2023, payment users should adjust how they send and receive money to continue using CHAPS.

Integrating ISO 20022 Adopting the Worldwide Payments Messaging Standard in CHAPS and RTGS Systems

In the years to come, retail interbank payments in the UK are also scheduled to transition to ISO 20022 as part of Pay—UK’s New Payments Architecture (NPA) initiative. The Bank and Pay formed the Standards Advisory Panel to offer industry guidance on implementing new payment standards in the UK.

Key Migration Dates for CHAPS

  • June 20 2022: DPs tested the CHAPS ISO 20022 messaging platform. 
  • June 19, 2023: DPs can send and receive ISO 20022 payment and non-payment similar messages from some CHAPS. 
  • Summer 2024: DNS settlement services will migrate to ISO 20022, and all RTGS will receive ISO 20022 non-payment messages.
  • November 2024: Mandatory use of Purpose Codes and LEIs for FI-to-FI payments and Purpose codes for property payments.
  • November 2025: Mandatory use of Structured Addresses, remittance payment data, and policy mitigation to ensure alignment with ISO 20022 international requirements.

Resources for Participants

All the information CHAPS participants and other stakeholders need to prepare their organization for the switch to ISO 20022 is contained in the ISO 20022 handbook. Some of the handbook contents include:

  • Migration timelines and overview.
  • Enhanced data policy.
  • Important information for RTGS account holders.
  • Future maintenance guidelines.

Enhanced Data Policy

The Bank of England’s strategy for adding fresh and improved data to CHAPS to existing communications standards, ISO 20022, is easier to adapt to and allows for the carrying of more complete and better-organized reference information. It comprises:

  • Purpose codes.
  • Legal Entity Identifiers.
  • Data on remittances.
  • Organized correspondence.
  • Extended character set.

Benefits of ISO 20022

Embracing ISO 20022 in the UK comes with a host of benefits. This international standard works to transform financial transactions for a future-ready economic landscape

  • Flexibility.
  • Harmonization.
  • Compliance and regulation.
  • Resilience.
  • Enriched data.
  • Competition and innovation.
  • Straight through processing.
  • Analytics.

Realizing the Benefits of Enhanced Data

To implement ISO 20022 within the industry, the Bank of England collaborates with representation organizations and CHAPS Direct Participants. The industry must use the richer data consistently and in line with other market infrastructures both domestically and internationally. The bank is also collaborating with the sector to create guidelines for particular use cases to optimize the advantages of implementing ISO 20022.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.