Last year, Swift, along with major global banks and market infrastructures formed the HVPS+ market practice task force. Whilst ISO 20022 standards are always evolving, stable best practices for high-value payments have been published, and the industry now has a roadmap to harmonisation.
Last year, Swift, along with major global banks and market infrastructures formed the HVPS+ market practice task force. Whilst ISO 20022 standards are always evolving, stable best practices for high-value payments have been published, and the industry now has a roadmap to harmonisation.
As cross-border payments grow in both volume and complexity, there is an increasing need for interoperability. Many geographic borders have practically disappeared and markets have reorganised along industry rather than geographic lines. Financial markets are adapting to reflect these changes.
The global financial community is embracing ISO 20022 as the industry standard language of payments. Although this provides a common foundation on which to build, requirements of high value payments systems providers (HVPS) are complex and evolving.
Since August 2016, the HVPS+ task force has worked with the industry to define and refine global implementation standards and to ensure that the industry realises quantifiable benefits in terms of automation, increased transparency and richer payments data.
"In the banking community, the work of the HVPS+ working group provides a unique opportunity to have an open and active dialogue among the main payment systems operators and agree on a common framework to implement ISO 20022. Harmonizing messaging standards across High Value Payment Systems will create efficiencies for payment system participants and establish the foundation to develop new services.” Michael Knorr, Head of Payments & Liquidity Management, Financial Institutions Group, Wells Fargo Bank
While the adoption of ISO 20022 is ongoing, a lot has been achieved in the HVPS community in a short time.
In the banking community, the work of the HVPS+ working group provides a unique opportunity to have an open and active dialogue among the main payment systems operators and agree on a common framework to implement ISO 20022. Harmonizing messaging standards across High Value Payment Systems will create efficiencies for payment system participants and establish the foundation to develop new services.
Why HVPS+ matters
The universal vision of a harmonised standards framework for payments highlights the fragmented state of today’s payment systems. Many domestic payments systems are being replaced or modernised and, while ISO 20022 is generally accepted as the global industry standard for payments, there has been no common basis for the application of standards across the various channels.
Payment communities set out from different positions and are at various stages of adoption. This generates a universal need for interoperability with existing message standards such as MT 103.
One of the principal aims of HVPS+ is to promote harmonisation around ISO 20022 and to reduce the risk of fragmentation due to inconsistencies and multiple standards across different markets. With a payments landscape in constant flux it is crucial that providers of financial market infrastructure agree common goals and milestones.
It is sometimes said that interoperability is more akin to a journey than a destination. The key milestones on that journey are community engagement, publication of content and the establishment of ongoing governance – so where has HVPS+ reached?
HVPS+ Milestone 1: Engagement
From the outset, HVPS+ has embraced openness and transparency as its guiding principles. For the first time, financial market infrastructures (FMIs) and Banks have come together to share implementation plans in detail (whether new or existing implementation). This is a tacit acknowledgement that standards must be discussed and refined before being universally accepted and adopted. But the spirit of collaboration has also enabled more to be achieved in less time, which has benefited all participants.
Milestone 2: Publication of tangible, usable specifications
In a short time, HVPS+ has established best practice standards for the implementation of ISO 20022 and public guidelines have been published on MyStandards. This is a significant landmark for the industry and enables the benefits to be delivered to a wider group more easily and quickly.
“To promote interoperability and harmonization of ISO 20002 implementations for high-value payment systems, the Federal Reserve Banks plan to leverage the HVPS+ guidelines to the greatest extent possible in the ISO 20022 implementation for the Fedwire Funds Service, says Gina Russo, Federal Reserve Bank of New York.
The HVPS+ initiative has already achieved a lot but there’s a lot more to come:
- Liquidity management and reporting, Q4, 2017
- Interbank Direct Debit, Q4, 2017
- Interoperability recommendations for cross-border transactions were mapping to the FIN messages will be required, Q3 2017
To promote interoperability and harmonization of ISO 20002 implementations for high-value payment systems, the Federal Reserve Banks plan to leverage the HVPS+ guidelines to the greatest extent possible in the ISO 20022 implementation for the Fedwire Funds Service.
Milestone 3: Governance for Ongoing Maintenance
HVPS+ is a living group that includes FMIs banks and other industry participants. Guidelines will be updated as the underlying standards evolve, as determined by the HVPS+ group which meets regularly. The group welcomes contributions from any FMI or bank.
“Swift is proud to be working with the membership of HVPS+ to shape the future of ISO 20022 implementation. The speed and success of HVPS+ development reflects the commitment of the global financial community to maintain its successful track record in contributing to transformational industry payment solutions across borders, such as SEPA, ISO real-time and Swift GPI. “ Isabelle Bouille, Principal Standards Specialist, Market Practices, Swift.
