Faster payments are on their way, albeit more slowly than many of us would like. By faster payments we mean real-time payments across the globe for all payments, be they large or small, corporate or non-corporate.
Although the momentum for faster payments is building, there is still quite a lot behind the scenes that needs to be sorted out. One major issue that needs addressing is that of standardisation. There needs to be a common set of data that can be exchanged in a common syntax. At the moment, cross-border transactions present something of a challenge because of the different settlement networks in place in all the different countries. Greater levels of interoperability between domestic clearing systems are required in order for faster payments to become a reality.
This means countries have to address the issue of faster payments on two levels – what is required on a domestic level and on an international level. The two have to be compatible as a certain level of harmonisation of market practices and standards is necessary if global interoperability is to be achieved.
Those levels of interoperability are getting closer as standards are already becoming more widespread in the industry. The very fact that this is a topic being debated at conferences such as SIBOS shows how seriously this issue is being taken.
The standard that really sticks out as being the one that global faster payments will hinge on is the message standard ISO 20022, a defined standard already existing within SEPA. The adoption of such a standard internationally needs to happen if payment system interoperability is a goal. It is widely agreed that this is the most viable standard in existence at the moment and it is unlikely to be superseded by anything else in the near future. Why? It offers a quick, efficient way of developing and implementing message standards as a basis.
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