The National Bank of Ukraine (NBU) will initiate a project to align Ukraine’s payments infrastructure with the international ISO 20022 standard. The project aims to modernize Ukraine’s financial infrastructure to improve the country’s competitiveness and integration with global markets.
The project is implemented jointly with SWIFT supported by the USAID Financial Sector Transformation Project and the European Bank for Reconstruction and Development (EBRD).
The main advantages of ISO 20022 application in the Ukrainian payment structure are as follows:
- harmonizing the Ukrainian payment infrastructure with the global one
- engaging new payment market players and payment instruments in line with the EU PSD2
- introducing new and enhancing the capabilities of current payment instruments to benefit banks and their clients
- implementing new automated processes that cover the full cycle of payments
- improving the quality of services, performance and transparency of payments
- expanding payment details by adding supplementary information
- enhancing information protection.
“ISO 20022 is a technological platform streamlining automated process of payments’ delivery and conveys more supporting information about the payment. Respectively, this will save costs of transactions and secure transactions’ delivery,” explained Sergii Kholod, NBU Deputy Governor. “Credit transfer, direct debit, various information requests, including on the account balances, will all be possible in the national payment infrastructure in line with the ISO 20022 format.”
In particular, ISO 20022 is expected to be implemented in NBU System of Electronic Payments (SEP) by the end of 2021. Going forward, these efforts will simplify the interaction between Ukraine’s and the world’s payment systems through the use of straightforward and globally accepted standards. In the mid-term, as part of conversion of the SEP to ISO 20022, fast payments system are to be introduced.
Furthermore, as part of the project, the NBU drafts the ISO 20022 models to be applied in the Ukrainian payment infrastructure in the following areas:
- credit transfer i.e. transfers initiated by the payer
- debit transfer i.e. transfers initiated by the payee of remittances/the recipient
- special cases and investigations i.e. confirmation of bank details, noncompliance with the payment guidelines, investigations of the payment etc.
At present, the NBU completes actions on credit transfers. Drafted documents on this issue are posted on NBU website for discussion among market players. Considering the road map of the project implementation, market players can plan changes in proprietary internal and external payment systems.
ISO 20022 is an international standard and guidelines for describing business processes entailing electronic financial messages, and design of charts and formats of such messages.
It can be considered a financial Esperanto, a lingua franca for various automated systems of the financial and trade markets participants.
The ISO 20022 was approved in 2004, and in a couple of years based in its methodology 280 different types of messages were designed. The standard constantly and rapidly develops, represented models improve responding to the needs of the market players.
Today, it is the basis for such formalized models and financial transactions:
- Payments and settlements
- Securities transactions
- Servicing trade transactions
- Bank cards
- Currency market transactions.