ISO20022 is providing standardisation and efficiency to global businesses utilising the ACH Network.
The emerging status of ISO 20022 globally has caused some confusion in the United States about what it is and what it means for the Automated Clearing House (ACH) Network. As a leader in bringing a broad set of industry participants together to agree on payment-related rules and standards, NACHA—The Electronic Payments Association® in the U.S. has taken a key role in providing dialogue, education and analysis in the area. Together with financial institutions, NACHA is enabling U.S. businesses to lower payment cost and gain efficiency by supporting ISO 20022 payment instructions for the U.S ACH Network.
The ACH Network is at the center of commerce in the U.S. For decades, it has moved payments and information together in and out of bank accounts to the tune of 24 billion transactions annually totaling more than USD 41 trillion. As its trustee, NACHA works to identify opportunities to leverage the Network to further improve the payments experience for all who use ACH payments.
As the ACH Network -- which universally connects all 12,000 financial institutions in the U.S. -- evolves to adapt to an ever changing environment to ensure we are meeting present and future needs, one of our recent efforts is to encourage and promote ISO 20022 integration.
ISO 20022 is a tool developed by the International Organization for Standardization that can standardise messages across all payments types, including ACH payments, enabling greater automation and straight-through processing (STP), and reducing payments exceptions and risk.
As such, it is important that financial institutions, other Network users, and the global community understand the benefits of ISO 20022 and its implications for the payments industry, as well as the opportunity for the messaging standard to take advantage of the Network’s ubiquitous reach, efficiencies, its unique ability to pass information with the payment itself, and proven reliability.
The emerging status of ISO 20022 as a potential international payments standard, coupled with early adopter actions in major global markets, is driving a frenzied dialogue among financial institutions, businesses and related providers. In this setting, there is a lot of confusion about what it is and what it means for the ACH Network.
As a leader in bringing a broad set of industry participants together to agree on payment-related rules and standards, NACHA has taken a key role in providing dialogue, education and analysis about ISO 20022.
NACHA is active within the U.S. ISO 20022 Stakeholder Group. As for international organisations, NACHA is active in SWIFT’s Common Global Implementation (CGI) initiative and is a member of the Interactive Financial eXchange (IFX) Forum.
NACHA is exploring where ISO 20022 can be valuable for various payment types in the U.S. Many major U.S. corporations and banks have shown great interest in adopting ISO 20022 and supporting other early adopters of the ISO standard, and we expect that to continue.
The goal of NACHA is to meet the needs of the present, with a mindset towards the future, such as working closely with high value payment systems to better ensure ISO 20022 implementation consistency.
With our current focus being on ISO 20022 integration with ACH in the U.S., we are providing industry tools and solutions that allow ACH users to translate and integrate the ISO 20022 payment message standard for both electronic payments initiation and payments remittance without making changes to the current ACH formats and with the support of the NACHA Operating Rules.
To help standardise implementation of ISO 20022-formatted payment messages, NACHA released the ISO 20022 Mapping Guide to help banks map ISO 20022 credit transaction payment instructions to corresponding ACH file formats in customer-to-bank communications. We will continue to build out the Mapping Guide, with plans to add other ACH payment types. We also plan to map additional ISO messages in support of standardised ISO 20022 adoption in the U.S.
Additional reports and educational resources are available in NACHA’s online ISO 20022 Resource Center, which also features a space to submit an ISO 20022-related question to NACHA experts.
As the ISO 20022 standard continues to gather pace in major markets around the world,
NACHA will continue its efforts to meet the needs of the present by providing industry resources and solutions to assist with ISO 20022 ACH integration while preparing for the future by continuing to monitor, explore and engage with market participants around the globe.
More information on the Payments Innovation Alliance, a NACHA membership program that brings together diverse, global stakeholders to promote payments innovation that support the ACH Network and the payments industry worldwide, is also available on NACHA’s website.
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