Taking cross-border payments to the next level

Encouraged at the G20 level, cross-border payment enhancements have gained a global focus. Richard Dzina, Senior Vice President of Core Product Management at The Clearing House, explores how the adoption of ISO 20022 messages and extending operating hours can support progress in cross-border payments.

As cross-border transactions increasingly become a critical element for today’s more globalised economy, the landscape for high-value payments is evolving rapidly. In turn, emerging technologies, new market entrants, and the ever-growing demand for off-hours processing are reshaping the approach to international payments.

To remain competitive and lead in this dynamic environment, payment networks around the world are being pushed to the next level. One area of focus has been to standardise payment messages worldwide by migrating to ISO 20022. Many market infrastructures have already transitioned to the new standard in a coordinated global effort to unlock wide-ranging benefits – including enhanced efficiency, enriched data content, greater automation, and opportunities for innovation – across the payment ecosystem.

A seamless migration

The ISO 20022 migration is already in full swing. A key date in the journey was 18 - 19 March 2023, when Swift messages for cross-border payments globally and high-value payment networks in Australia, Europe, and New Zealand each migrated to the new standard. Since then, The Clearing House’s (TCH) high-value payment network in the U.S., known as CHIPS®[1] , successfully migrated from its proprietary formats to the ISO 20022 standard in April 2024.

The CHIPS® migration drew inspiration from the lessons learned during preceding global migrations. It was essential that, in the network’s biggest change in a generation, the transition could be orchestrated without disruption. The CHIPS® move to ISO consumed significant resources, with a focus on guaranteeing the technical readiness of the network and ensuring the readiness of its participants.

Implementation is just the start

Regardless of the jurisdiction in question, ISO 20022 implementation could be considered the first phase of an extended journey, with a key focus on wider adoption and use of the advanced features. Today, the majority of participants use ISO 20022 messages in a limited way, only populating messages with the information that could fit in the legacy format as opposed to populating with the more robust information supported by ISO 20022.

True success lies in the full realisation that processing efficiency, enriched data content, structured message formats, and innovation around a common message suite will advance the landscape of cross-border payments. It will be prudent for banks to develop data-driven products and services that capitalise on the ISO benefits to help drive adoption among end-users.

There are several upcoming milestones on the ISO 20022 journey, including the Federal Reserve Bank’s migration of the Fedwire Funds Service in March 2025, and the end of the coexistence period for cross-border payments on Swift in November 2025, which will sunset legacy MT messages. With this, there’s a global effort to drive harmonisation, ensuring that divergent local implementations of ISO 20022 do not undermine the intent and value of standardisation over time. Active collaboration across payment market infrastructures, banks, and industry groups remains vital.

The road ahead

As the competitive landscape for cross-border settlement continues to intensify, the extension of operating hours for these networks represents an important next step – one that’s aligned with the goals of the G20 Roadmap for Enhancing Cross-Border Payments.

This interest is not only shaped by a desire to unlock cross-border payment efficiencies, but also by the opportunity for participants to access new markets and enrich existing ones. The laser focus on out-of-hours cross-border payments from emerging technologies and new entrants is also encouraging incumbent payment system operators to enhance services to remain competitive or risk disintermediation.

In view of this trend, TCH and CHIPS® participants are assessing the feasibility of an optional Sunday operating session, whereby CHIPS® would open beginning on Saturday at 9pm EST and run continuously through Monday at 6pm EST. (Banks opting not to participate in the Sunday session would be able to begin sending payments as they can today, beginning at 9pm EST on Sunday.)

As with ISO 20022 adoption, there's a long road ahead – and the real work of bringing this vision to fruition is just beginning. Success will lie in coordinating ecosystem-wide changes, meaning that greater cross-border collaboration remains the order of the day.

1 - CHIPS is a registered service mark of The Clearing House Payment Company.