Eight ways Canada will benefit from adoption of ISO 20022

SWIFT and the Canadian Payments Association (CPA) have published a paper that outlines the adoption approach for ISO 20022 within the Canadian payments landscape. Titled 'Adoption of ISO 20022 for Payments and Extended Remittance Data in Canada', the paper focuses in particular on the importance of renewed messaging standards and Extended Remittance Information (ERI). It also covers the expected benefits of ISO 20022 and ERI adoption in Canada.

The adoption of global standards in Canada will enable companies to implement automated reconciliation of incoming payments with outstanding invoices and a general increase in payments automation. Companies using the Canadian payments system will be able to reduce their manual processes and implement standardised payment formats.

Mark Brule, director of payments innovations at the CPA, said in a statement: “The main drivers behind CPA’s ISO 20022 initiative are to provide the Canadian financial community with enriched, robust remittance data, to enhance domestic and cross-border interoperability, and to increase efficiency.”

Benefits of ISO 20022 and ERI Adoption

The expected benefits of ISO 20022 and ERI adoption for Canada, as stated by the CPA and SWIFT, are as follows:

1. Automated reconciliation for payment remittances. With ISO 20022, the essential remittance data can be added to payment message layouts as standardised fields, which will enable automated reconciliation of payments without manual intervention, in turn improving cash flow, forecasting and straight-through processing.
2. Rationalisation of multiple formats. There are currently numerous types of payment format in use in Canada, which are costly to maintain. Using one standard will reduce complexity and cost.
3. Support for cross-border interoperability. Using a global standard will increase domestic and cross-border settlement efficiency, allowing cross-border payments to be aligned with international standards.
4. Better data integrity. ISO 20022 addresses data integrity issues, such as truncation and misinterpretation of values in free-format fields, with the associated delays in processing.
5. Better regulatory transparency. Automated reconciliation of invoice/payment remittance data will enable banks to comply more easily with domestic and cross-border regulatory requirements.
6. Better market efficiency. More automation and standardisation will have benefits for small and medium companies in Canada.
7. Potential new value-added services. The potential to streamline payment products will enable banks to develop new payments services.
8. Faster time to market. Interfacing payment messages with the corporate ERP systems will become much simpler and quicker.

A copy of 'Adoption of ISO 20022 for Payments and Extended Remittance Data in Canada' is available here.