Will ISO 20022 Replace SWIFT?

The two main ISO 20022 changes affecting ecommerce businesses directly relate to increased transaction speed and more efficient reconciliation. How obviously these things will affect your business depends on a few factors, namely the size, international reach and accounting management of your business. 

The bigger your business, the more likely it is that you will be making larger payments to international suppliers. If all parties involved in the transaction are using payment processors and banks that have fully adopted ISO 20022, you should notice that transfers are processed faster, especially if it involves two different countries.

If your business has a wide international customer base, then it’s also likely you’ll be doing a lot of transferring of money between currencies and tax jurisdictions. This will become simpler and quicker. 

In addition, if you offer invoice payments, bank transfers or direct debits, the time between the customer making the payment and it being booked in your account will be significantly reduced.  This new real-time cash flow visibility will make forecasting and inventory management much easier. Your accounting department will likely notice the biggest change, especially if your business is large enough to use commercial accounting software like SAP. Because of the standardised fields and additional information in MX messages, straight through processing rates (meaning the number of transactions that are completed without human interaction) will sky rocket.  The AI reconciliation piece of your accounting software will be able to match payments with invoices much more accurately when there is more information to compare. This increase in straight through processing should, in theory, reduce the per transaction fee banks, credit cards and digital wallets charge to use their products.

On that point, all we’ll say is that even ISO 20022, the most game-changing shift in banking in decades, has its limits.