There's an exciting change in the payments industry – a new international standard called ISO 20022 – that will soon be coming to the forefront for millions of customers and businesses that send and receive money.
ISO 20022 is a critical industry initiative that will help standardize payments and information reporting, while making them more secure and transparent.
We spoke to Christopher Chazin, Head of Treasury and Trade Products and Services, Commercial Banking at TD Bank, AMCB, to break down this new standard and discuss how the bank is preparing for it.
What is ISO 20022?
ISO 20022 is a multi-layered international standard for financial messaging between banks and other participants in the financial system regarding business transactions and customer information.
"Banks in the financial ecosystem need to exchange information to move money," Chris explained. "For example, if you are a company that is doing business with TD and you want us to handle your payroll, you're sending us a file that says, 'Here are all the people I need to pay. Here's the amounts I am going to pay, and here's when they should get paid.'"
But banks need to know where to look for that information so they can route the payment to the right bank and get that money to its intended beneficiary, like a supplier's account, for example.
"With ISO 20022, it sets very clear rules about where information should be put in the way that banks exchange it," Chris added. "These ISO rules will make information sharing more consistent across the banks, more robust and easier to understand. This will be particularly impactful on international wires and other payments that cross borders."
ISO 20022 is also about improving the secure transfer of funds. As financial institutions, banks need to make sure that money is moving into the hands of the intended parties.
"With ISO going forward, the standards will require separate fields in each payment instruction for city and country to help ensure proper routing," Chris said.
Sending Money Overseas and Ensuring Payment Accuracy
Historically, cross-border payments have been viewed as relatively more complex than domestic ones because of inconsistent data classification and placement within transfer instructions. For example, if you live and work in the United States, you may need to send money to people and organizations in other countries. To send money to recipients outside of the U.S., TD may use intermediary banks to direct funds to the beneficiary's bank account at a foreign bank.
"Intermediary banks may then route funds to another intermediary bank to help reach the end recipient's bank, or they may send it directly to the recipient's bank," Chris said. "ISO 20022 helps us and the customer track that payment in a robust and safe way."
The consistent coding enabled via the ISO 20022 standards will make it easier for banks, whether receiving or sending payments, to further automate and accelerate fraud screening. This is key to helping keep bad actors at bay and ensuring TD complies with regulatory requirements and industry standards.
As banks and payment systems around the world move toward the same standard, structured information will allow for detailed reporting, easier account reconcilement and other benefits, like fraud mitigation, for end customers who send and receive payments with parties in other countries.
Eventually, ISO 20022 will help add value to a broader set of payments. The ISO standards will allow for richer data to be included with each the payment than is typically possible today, something that will be particularly impactful for business-to-business (B2B) payments.
"As an example, a contractor receiving payment from a property manager for services provided across multiple locations could see specific invoice information in the details tied to the payment," Chris said. "Businesses will be able to include line-item detail with their payments. This will take some time to come to fruition, but ISO should make it easier to process and reconcile these types of B2B payments."
The move to adopt the ISO standards is being driven by a few critical industry timelines. Effective April 8, 2024, CHIPS (Clearing House Interbank Payments System) was the first high-value payment system in the U.S. to adopt an ISO 20022 message format. On March 10, 2025, Fedwire – the bank-to-bank wire system operated by the U.S. Federal Reserve – will require all 5000+ participants to be ISO-ready. Culminating in November 2025, SWIFT, a messaging network that is used by banks and corporates globally to send and receive financial information, will require its 11,000+ participants to be ISO compliant.
And while other payment methods in the U.S. such as ACH and Card may eventually move to the ISO standards, newer payment rails like The Clearing House's RTP® and FedNow have been built from the ground-up using the ISO specifications.
What TD is Doing to Prepare for ISO 20022
TD is doing quite a few things to prepare for the transition to ISO 20022, with our customers always top of mind.
"The first step is the core engine that we use to process wires is being upgraded," Chris said.
The new processing engine will take in the necessary structured data elements, both mandatory and optional, and enable funds transfers to be seamlessly executed in the ISO-compliant format.
"In parallel with the processing platform upgrade, we're also upgrading the communication channels that our clients use to provide us the instructions on who to pay, how much to pay, and when these payments should be executed," he added. "These channels include our online banking platforms that our commercial customers use to initiate wires or upload files of wire instructions, as well as the systems used by customers to send TD large batches of file-based payment instructions. These communication solutions are being upgraded to make sure that they are also ISO compliant."
"You have the core technology platform and then you have the client intersection and how client communications with that platform will happen," Chris said. "Those are the big projects that are in flight and there are implications for both outgoing and incoming payments."
In addition, TD continues to develop FAQs, best-practice guides and other materials to help our clients understand the benefits of the industry's move to ISO 20022 and to ensure the system and tools they use to manage their business's finances are prepared. "It's important that clients ask the vendors providing their ERP, Treasury Management Systems (TMS) or Accounts Payables and Accounts Receivables tools about their ISO readiness," Chris said. "Of course, TD will be there to help along the way."