Canada has adopted ISO 20022, a major step in the modernization of Canada’s payment system. The announcement comes as demand for ISO 20022 is widespread among Canadian businesses.
ISO 20022 is a global standard for electronic payment messages that will help businesses and financial institutions facilitate the move away from paper by creating the ability to exchange more information – like invoices – with electronic payments. ISO 20022 also helps to streamline cross-border payments by using a common global “language” for payments data.
In keeping with its responsibility to underpin the Canadian financial system and economy by providing safe, efficient and effective clearing and settlement of payments, The Canadian Payments Association (CPA) has embarked on a multi-year initiative to modernize our payments system.
This early development is an important step in a process that, over time, will enable significant improvements to the overall payments system.
Along with greater efficiencies, the standard brings with it tangible economic benefits. For example, recent research indicates that cost savings from the adoption of ISO 20022 could be as high as $4.5 billion over five years from the reduction in cheque volume alone. In 2015, nearly one billion cheques were written in Canada. Though hard to quantify, the full financial benefits of ISO 20022 are expected to far exceed that figure.
ISO 20022-enabled messages and rules for Automated Funds Transfers (which include payments like direct deposits and pre-authorized debits) are now available for implementation in the market and are the result of nearly two years of extensive work by CPA with financial institution participants and stakeholders.
The approach for the Large Value Transfer System (LVTS) and Electronic Data Interchange (EDI) will follow.
The CPA is leading ISO 20022 with a market-driven approach to adoption out of consideration for the business cycles of its member financial institutions. As implementation proceeds, the CPA will work with financial institutions, businesses and stakeholders to determine appropriate end dates for adoption. Similar to how remote cheque deposit capture is being implemented, the CPA will support ISO 20022 adoption with sound research, industry consultation, education and training.
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