America's Customer Festival is where industry experts gather to network, learn from each other, and discuss the latest payments strategies and technology like ISO 20022

ISO 20022 – Building the right foundation to meet the future payment needs of Canadians

America's Customer Festival is where industry experts gather to network, learn from each other, and discuss the latest payments strategies and technology like ISO 20022

The CPA is one of Canada’s core financial market infrastructures, and we’re planning to change the way we do business

We’re adopting an internationally recognized payment messaging standard – ISO 20022 – as part of a comprehensive strategy to modernize Canada’s payments system. The transition to this standard, which is being adopted by a growing number of market infrastructures around the globe, will support domestic commerce while strengthening Canada’s abilities as a trading nation. It will also create new opportunities for every financial institution, payment service provider and business in Canada.

Over the years, multiple message standards have been implemented in Canada to meet particular payment needs at specific points in time. But the payment needs of Canadians have changed significantly in the digital age, and the legacy standards lack the flexibility to adapt. For example, most payment message standards in Canada (including those used by the CPA) only provide for a limited amount of remittance data to accompany a payment message. This is a barrier to end-to-end straight-through processing and the implementation of effective enterprise resource planning solutions that reduce the need for manual intervention. Additionally, payments travelling across the national clearing and settlement systems don’t “speak the same language”. There is one message standard for automated funds transfers (pre-authorized debits and direct deposits), a second for electronic data interchange (business-to-business transactions and bill payments), and a third for wire payments. Therefore the businesses, payment processors and financial institutions that create, send and receive these payments need to maintain multiple suppliers, software, processes and business systems to support their payment operations. Often, intervention is required to “translate” a payment message across multiple technology platforms. As a result, there can be many stops and starts along a payment’s journey to its destination.

ISO 20022, which operates independently of any specific technology platform, offers an adaptable and future-proofed methodology for the development of payment messages. Since it was developed to cover the needs of the entire financial industry, as opposed to a single sector, it also contains message definitions and other content required by the methodology to explain the underlying concepts and processes in the business environment in which the messages will be used. This provides the flexibility to translate existing standards to an ISO 20022-compliant format or build entirely new types of financial messages to meet evolving business needs. It’s also an open and evolving standard. Anyone can contribute new content, provided that they follow the procedures set out by, and gain the approval of, the standard’s managing body.

ISO 20022 also provides an increased capacity for remittance data to travel with a payment – a key benefit for businesses looking to automate Accounts Payable/Accounts Receivable functionality in their enterprise resource planning. This capacity for extended structured remittance information creates an opportunity for financial institutions to provide increased transparency, which will allow for easier payment tracking, issue resolution and system reconciliation for financial institutions and their customers.

Our approach to the adoption of ISO 20022 capitalizes on the value of the standard for all payment participants in Canada: reduced costs for those managing multiple standards today, greater domestic and global interoperability, and setting the stage for innovation and efficiencies through enhanced remittance data.

To learn more about ISO 20022 and our plans to build the right foundation to meet the future payment needs of Canadians, I encourage you to visit the CPA website


Gerry Gaetz is President and CEO of the Canadian Payments Association. The CPA operates core national infrastructure essential to meeting the payment needs of Canadians and is the centre of excellence for payments in Canada. It leads its member financial institutions, businesses, government and the public in establishing the rules of Canada’s payments highway. CPA systems cleared and settled $43.7 trillion worth of payments in 2013, an average of $173.4 billion each business day.

In a global and digital economy, the CPA provides a strong foundation to support innovation and the evolving needs of all those who depend on payments.

This is a guest blog from the Canadian Payments Association.

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