Clearing Up The Case For ISO 20022

NACHA ISO 20022 Confusion

Depending on who you are and where you are in the world, the ISO 20022 framework can mean a lot of different things. Though the standard is nothing new, it’s continued to fuel ongoing confusion about what its true purpose is. Jan Estep, President and CEO of NACHA, joined Karen Webster to help clear up the complexities surrounding ISO 20022 and what NACHA is doing to help spread the word.

Though it can be traced back to 2004 and was revised as recently as 2013, the ISO 20022 framework is still a source of confusion across the payments industry.

This “standard for standards” is designed to set the tone for a global financial industry message scheme, but unfortunately it is often misunderstood.

At its core, Jan Estep, President and CEO of NACHA, explained that ISO 20022 is all about creating a standardized approach to building messaging standards across financial services.

But, therein lies one dimension of the confusion.

The standard isn’t related to any one organization or segment, it was created by the International Organization for Standardization for many global transactions.

This means it’s not solely confined to the payment industry, and is used for many different purposes across many different countries – all of which Estep said add to the flexibility of the standard, as well as some confusion.


In order to truly grasp what ISO 20022 is, it may help to start with what it’s not, especially when its increase in popularity these days has been as a result of the conversations taking place around real-time payments.

“For people who haven’t been familiar with it in the past, they hear discussions about real-time payments and then they think ISO 20022 is real-time when it’s not,” Estep explained. “It’s not one and the same.”

ISO 20022 is also sometimes related to the programming language XML, but those two are also not one and the same.

The standard’s flexible and global nature has left many wondering how it should really be applied and when. It can be implemented by countries and organizations in different ways, resulting in variations in the standard.

It’s also not rigid. Though ISO is all about consistency and provides a data dictionary to help entities better understand the standard itself and deliver that consistency, there’s still room for interpretation.

Another big confusion point for ISO 20022 is its application to ACH – and now Same Day ACH.

Estep makes it clear that the concept of Same Day ACH needs to be separated from ISO.

She explained that the work NACHA has done with the utilization of ISO 20022 has nothing to do with the actual speed of the payments themselves. Even the most recent work with the U.S. ISO 20022 Stakeholder Group, which includes the Fed, X9 and TCH, is aimed at exploring how valuable the standard can be for various payment types in the U.S.


NACHA’s role is to help provide the necessary education and tools to help clear the ISO 20022 air.

“Although it’s helpful to streamline things like global payments, we really need to be aware of geographical differences and work to make sure we’re interpreting the way that ISO is used in other countries,” Estep said.

Think of NACHA’s efforts like the universal adaptor that’s needed to make electronics work anywhere in the world.

Those efforts involve a combination of education as well as its mapping guides to help those having trouble interpreting ISO 20022 and how they can use it.

One example can be found in the global organizations that want to work with other companies and banks in different countries and would sometimes have payments that start out as ISO and end up ACH, or vice versa.

But, as Estep pointed out, having a mapping guide specifically for that ISO-to-ACH and ACH-to-ISO work has allowed for consistency that wasn’t initially available across organizations.

Not only is consistency top of mind, but it’s also important to provide a benefit to both financial institutions as well as international companies, she added.

Part of NACHA’s efforts in terms of education is to make sure that organizations, both in the U.S. and globally, understand the current capabilities of the ACH network in the U.S.

The network in the states is distinctly different from most other countries, mainly because of its unique ability to carry large amounts of information with payments, which is why it’s important to ensure no capabilities are lost when ACH is mapped to ISO systems.

NACHA continues to work closely with the countries and financial institutions that support the mapping to identify what happens with any information that may not be mapped totally.

“There are certainly other areas more specifically where ISO and ACH are different — in support of that we’ve developed use cases to talk about where does ISO provide more capabilities, where does ACH have capability we don’t want to lose, and we’re doing that with a lot of outreach,” Estep explained.


“We’ve been working with the industry to develop tools and solutions that allow ACH users today in the U.S. to leverage ISO 20022 payment message standards for the payment itself and for remittance, without forcing everyone to make changes to the ACH formats and continue with existing NACHA Operating Rules,” Estep said.

Unlike the situation with high-value wire transfers, there’s no wide-scale conversion planned for ACH.

NACHA calls this work integration.

Estep said NACHA will continue to support integration over conversion, mainly because there are so many integrated systems and endpoints today with the ACH Network, both in financial institutions and businesses.

Integration, Estep said, requires an understanding of how ACH and ISO formats are used by various companies in order to continue to expand the support of NACHA’s mapping guides.

One way organizations around the world are working together began with conversations last year about entities sharing their implementation guides.

Global messaging platform SWIFT, Estep noted, has embraced ISO 20022 and supported work groups that look at deployments of messages and payments using the ISO framework and bring together countries deploying real-time payments systems.

Though these implementation guides serve as the way ISO standards become executed in countries, Estep said they can also be the source of some inconsistencies.


Though NACHA maintains its focus on how ISO 20022 can be mapped to the ACH network, there is still a need to keep an eye on the possibility of standardizing ISO 20022 for real-time payments.

“We also want to be cognizant of what other countries are doing as they’re using ISO 20022 for real-time payments, because if we can be synergistic in that effort and have areas where there’s consistency across payment types, as well as across countries, I think the end result will be more efficiency for everyone,” Estep pointed out.

The idea of having a consistent standard deployed within various organizations with enough consistency that payments and data can be mapped efficiently may sound like tedious work that will never end.

Estep agreed, but added the caveat that the ongoing aspect of the work is not because it’s tedious, but rather because of the ever-changing technologies and usage of those technologies at play.

“I think that’s the part that makes it never-ending,” she added.

“The goal is not to have everyone exactly the same, we’ve realized that task would be never-ending because it’s just so hard to get everyone on exactly the same page.”

Instead, NACHA is looking to continue serving as a resource to help lessen the complexities and misunderstanding surrounding ISO 20022 through ongoing education, something Estep said is critically important.

“Once you get into the detail of it, it’s a very flexible and vibrant format which is why we can integrate it into ACH payments in the U.S. today.”