The phase 1 implementation of the ISO 20022 migration strategy that was scheduled for November 2020 is being postponed by the Federal Reserve Bank, the U.S. central bank said in a press release on Monday, Sept. 23.
The Payments Market Practice Group asked the Federal Reserve to reassess its approach to the project, which involves a three-phased migration to the ISO 20022 messaging standard for the Fedwire Funds Service. The industry group prefers same-day implementation.
SWIFT announced last year that it is planning to allow its users to send data-rich ISO 20022 messages across its global network starting in November 2021. However, a phased-in process could cause cross-border exchange issues with financial institutions. If payments are not fully enabled for ISO 20022 by the time SWIFT rolls the system out, messages might get cut off.
To reduce risk, worldwide financial institutions have requested that the Federal Reserve and other global payment platforms embrace the same ISO 20022 strategy and implementation schedule.
The assessment by the Fed will incorporate dialogue from users of the Fedwire Funds Service and The Clearing House Payments Company, which runs the CHIPS funds-transfer system. The Federal Reserve will announce an amended adoption strategy after the assessment is complete.
The Federal Reserve announced in August that it was in the process of creating a real-time payments service called FedNow. This is the biggest infrastructure upgrade embraced by the Federal Reserve since the ACH system went online in 1972.
The news was announced by Federal Reserve Board Member Lael Brainard, who said extensive feedback went into making the choice, along with strong consensus among members of the banking and payment communities. All things considered, the Fed decided the time is right for a real-time payments system that is broadly accessible across the financial services ecosystem.
Of the 350 comments received on the subject of a faster payments service representing input from over 800 organizations, Brainard said, “Ninety percent called for the Federal Reserve to operate a real-time payments service.”