How to Deliver a Future of Safer Payments

If there’s anything the last year has taught us, it’s that we’re never prepared enough for disaster -but we do inch towards better preparedness. One example is the implementation of ISO 20022 in June next year. With greater payment messaging standards, we have a way of enhancing data and improving our adaptability and flexibility towards the changing economy – including safer cross-border payments.

We are at a cross-roads within the payment industry as less than 9% of payments are being made in cash and the level of fraudulent transactions are costing the economy £130 billion each year. Consumers are calling out for faster and more convenient digital transactions that don’t involve giving away an arm and a leg. But businesses are trying to balance convenience with better security, making sure that the parties sending and receiving payments are legitimate is not an easy job online.

On top of all of this, there is the rise of new forms of currency and changes in habits since the pandemic. Changes which will likely continue post pandemic. That brings me back to the topic of this article, how do we deliver safer payments in the future? I consider the below points essential to reaching this goal. Let me know your thoughts.

Improving payment messaging – ISO 20022 and LEIs

In a speech by Victoria Cleveland, Executive Director for Banking, Payments and Innovation at the Bank of England, she described the benefits ISO 2002.

“ISO 20022 will bring enhanced data deliver significant long-term benefits for not only the UK’s payment systems but participants and their customers. It provides flexibility to adapt to changes in the economy, emerging technologies and innovation. It provides international harmonisation, supporting cross-border payments. It can help compliance and regulation, providing richer data that will make it easier for businesses to detect fraud and help target financial crime. It will improve resilience as it allows re-routing of messages which could reduce the impact of outages on users. It provides enriched data that will improve analytics, reconciliations and promote competition and innovation. It allows straight-through processing with less need for manual intervention.”

Other key Payment System Operators from across the globe are also on the journey to implement ISO 20022 including the ECB’s TARGET2 and the Federal Reserve’s Fedwire. By November, SWIFT’s correspondent banking network will also embrace ISO 20022 by retiring the use of the existing MT standard and mandating ISO 20022. The Bank of England are going to be mandating Purpose Codes and Legal Entity Identifiers (LEIs) within certain CHAPS messages from Spring 2024 to enhance data in payment messaging in accordance with ISO 20022.

So, the many benefits of this payment messaging standard have already been recognised and with regulations mandating enhanced data, the benefits are about to be realised.


ISO 20022 and the Legal Entity Identifier doesn’t solve ALL the challenges of interoperability but it does create a common language that systems across the world can recognise and implement. The benefit of interoperability to the consumer is simple – the ability to use one payment provider to make purchases in different jurisdictions. The benefit to the merchant is a safe set of standards and enhanced data quality to aid Know Your Customer and Anti-Money Laundering checks.

Improved User Experience

With great interoperability, comes great user experience. Consumers and businesses don’t care about the difference between CHAPS and BACS nor do they care who the SWIFT is or if ISO 20022 has been adopted. They simply want to make a transaction and the conduit to that should be fast, cheap and secure.

As payment service providers, FIs and banks begin to operate more closely together instead of in competition with each other, these benefits are realised. One of the most exciting things happening now is the introduction of APIs in the banking industry. As providers connect services via APIs, consumers naturally realise the benefits of increased trade.

Broader Access

The introduction of APIs in the banking world, facilitated perhaps by the Open Banking initiative, has led to the ability to include many new payment service provider participants to the world of banking. FinTech companies are now able to get their financial technology out into the wider world and become competitive in the financial market.

The broader access and increased competition will be yet another step to enable better services for consumers and businesses alike.

Technology is Innovation

As we look towards the future, we have to recognise that consumers want to use technology to make transactions easier. Enhanced competition means there are more options for consumers to choose from and more technologies to find exactly what they need. But as I’ve mentioned, the consumer is not just looking for convenience, they want security to underpin it. We always ride a train expecting the engine is working, the security of the payments industry is much the same, consumers just expect it to work. Bringing in a set of common standards, interoperability, enhanced cooperation between central banks and competing financial services is already underway. There is much to look forward to in the next 5 years.

To learn more about Legal Entity Identifiers, read our ultimate guide here. Or to find out more about getting a Legal Entity Identifier for your business, click here.

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