ISO 20022 Migration for the Australian Payments System –
Issues Paper – April 2019 1. Introduction

The Australian payments system comprises a number of payment services, clearing systems and settlement systems. Some of these services and systems use the Society for Worldwide Interbank Financial Telecommunication (SWIFT) Message Type (MT) messaging standards for messages used in trading, clearing, settlement and payments. SWIFT has recently announced plans to cease ongoing support of some categories of MT messages (Categories 1, 2 and 9), used in cross-border and correspondent banking payments, after November 2025 and migrate them to the International Organization for Standardization (ISO) 20022 standard. SWIFT's end goal is to fully migrate all payments and reporting traffic to ISO 20022, allowing the community to use the same standard for all payments flows. A date has not yet been announced when the MT messages used in closed user groups (CUGs), including those used for Australia's High Value Clearing System (HVCS), will cease to be supported. A number of key financial market infrastructures worldwide already have projects underway to adopt the ISO 20022 standard for payment messaging over the next five years. Given SWIFT's end goal for full migration to ISO 20022 and the number of international projects underway, it is an appropriate time to consider adoption of the ISO 20022 standard in Australian payment systems.

The Payments System Board (PSB) has identified migration to ISO 20022 as a key strategic issue for the Australian payments system. Accordingly, the Reserve Bank of Australia (RBA) and the Australian Payments Council (APC) are undertaking this consultation to assist the industry in coming to agreement on key strategic decisions for an ISO 20022 migration project. The intention is to ensure the migration project is undertaken in a timeframe that does not pose risk to the payment system and that appropriately considers the objectives of migration and broader long-term opportunities for the industry. This paper is the first in a series of three consultation papers and will set out some of the key strategic issues for an ISO 20022 migration. A second paper will provide a summary of the initial consultation responses and set out some proposed options for implementation. A third paper will present final conclusions from the consultation, including agreed scope, governance, migration strategy, timetable and implementation approach. The aim of the RBA and APC is for this project to be complete by the end of 2024, ahead of the completion of SWIFT's cross-border payments migration and in line with the timeframes for international migrations.

Section 2 of this paper provides some background on the ISO 20022 message standard, including the benefits and international migration experience; this section also discusses the objectives and potential challenges of the migration for Australia. Section 3 considers the scope of the project, looking at the core messages that should be migrated and other messages that may be considered in scope. Section 4 looks at payment system design issues that could affect the approach taken for the ISO 20022 migration. Section 5 identifies various migration approaches for consideration. Section 6 discusses considerations for project governance. Section 7 outlines the next steps and how to respond to this paper.