Today, the standards and formats for exchanging electronic messages (SEPA & international Credit Transfers) between financial institutions mutually and businesses are too limited for the necessary evolutions in terms of speed, information enrichment and risk monitoring.
In a globalized world, there is therefore a need for new versions of current financial messaging standards and formats. These new standard and formats are able to support faster and more transparent payments. Moreover, they will improve your payment and reconciliation processes.

Based on the above concerns, the European Payment Council (EPC) has decided to introduce the use of a new ISO 20022 SEPA standard as from 17 March 2024From then on, you will be able to initiate payments and direct debits via payment files that comply with the 2019 version of the XML ISO20022 standard. This new standard is richer and more structured than current versions.

The new messaging standards can be used from 17 March 2024 alongside the existing standards, which will be replaced by the new standards over time. When a postal address is specified after November 2025, the structured format must be used (where appropriate, the country code and town name will be mandatory).

The ultimate goal is for all postal address details in payment instructions to be structured in separate fields when an address is used (e.g., not only for the country and town, but also for the street name, house number, postcode, etc.).

Note : The existing MT101 messages do not support fully structured postal address data that meets all future requirements. They are therefore no longer recommended and will have to be replaced over time by the XML ISO standard (pain001 format) with structured postal address, if applicable. SWIFT is accordingly considering decommissioning MT101 messages over time.

ISO20022 messages will offer new opportunities for the different actors such as support higher straight-through processing (STP) rates while reducing exceptions. Here are some of the key benefits

• Greater operational efficiency – higher straight-through processing rate
• Better risk management – richer data enables more effective sanction screening and less delay
• Improved reconciliation – by using structured remittance information, corporate finance and treasury teams can accelerate the reconciliation of payments and release goods earlier.
• Working capital improvements – finance and treasury teams can use enriched and structured data to optimize their payments. This enables companies to make better use of available funds.
• Support Payment On Behalf Of (POBO) – the current payment message format is not designed to efficiently support POBO. ISO20022 messages have structured fields to facilitate identification of the parties (including the ultimate creditor, ultimate debtor and initiating party).

We recommend that you start preparing for the new postal address fields structure that will be used for payment instructions in November 2025.

• Contact your ERP, TMS and accounting software providers to see if they already support enriched and structured address data according to the new ISO20022 standards.
• Check that your supplier and customer source data contains all the necessary data to correctly populate the structured postal address fields, or at least the mandatory fields (town name and country).