March 7, 2016
Canadian Payments Association announces new initiative to adopt internationally recognized payment messaging standard
OTTAWA--The Canadian Payments Association (CPA) has launched a multi-year initiative to modernize Canada’s core payments infrastructure, which will ultimately use the internationally recognized payment messaging standard, replacing multiple formats.
The design phase of the project is slated to be completed by the end of 2016, and will see the CPA deliver ISO20022 message standards for Automated Funds Transfer (AFT) payments for use by its members. ISO20022 standards for Large Value Transfer System (LVTS) wire payments and Electronic Data Interchange (EDI) payments will be delivered later.
The CPA has previously estimated that the cost benefits to businesses of a move to the ISO20022 standard could be as high as $4.5 billion over five years simply from the elimination of cheques.
Canada's impending adoption of the ISO20022 standard and Extended Remittance Information (ERI) will boost the use of digitised commercial payments, bringing huge benefits to the country, the CPA claims a new paper written with SWIFT.
The CPA is adopting ISO20022 as well as ERI through a mix of mandatory and optional data elements that will be included in the payment messages. The optional remittance information can be populated as either structured information, unstructured information, or as a unique reference, indicating where the information can be retrieved.
In a paper written with Swift, the CPA says that by adopting ISO20022 and ERI the industry will benefit from automated reconciliation of payment remittances and that increased straight-through processing rates and lower operational costs will ultimately cut the cost-per-transaction.
Other benefits from the move touted by the CPA include rationalisation of multiple formats, support for cross-border interoperability, better data integrity, better regulatory transparency and market efficiency and the potential to enable new value-added services.
All of this, concludes the paper, will ultimately "support domestic commerce, strengthen Canada’s competitiveness as a trading nation and create new opportunities for financial institutions, payment service providers and business in Canada".