You know how annoying it is when you go to another country and discover you can’t plug anything in because the electric outlets are different? The same thing happens today with some global payments, and the problem will intensify unless there’s international collaboration and greater standardization, two industry leaders stated.
“There are several versions now of ISO 20022 that are implemented in various different ways today. If within your country you implement a version of ISO 20022 with definitions specific to your country, but the country next to you uses a different version or different definitions, something might get dropped,” said Jane Larimer, Nacha chief operating officer and general counsel.
“That’s something we’re very conscious of for North America—how do we make sure that the version of the standard and the definitions within the standard allow for smooth translation so we can talk to each other,” Larimer told a Feb. 5 session at the Women in Payments USA 2019 Symposium in Arlington, Virginia. “If interoperability is a goal, and global payments is a goal, you have to start saying, ‘we’re all on the same version, or how do we map to and from?’”
Anne Butler, chief legal officer and head of policy and research at Payments Canada, which operates Canada’s national payments system, cited another area ripe for collaboration: standardization of APIs. Butler said this also requires countries to be “thinking not just about ‘what are you solving for in your own jurisdiction.’” It’s important, she said, “to make sure we take advantage of the potential of these kinds of standards, so we do not end up with walls where you have different standards trying to talk to each other.”
As Larimer noted, “If every single financial institution globally is creating their own API, think about that. The scale of that is completely inefficient.”
On another topic, as enhancements continue to be made for Same Day ACH in the U.S., Butler said Canada has enhanced its batch system, which she described as the equivalent of ACH and “the engine of the Canadian economy.”
“We’ve made funds available faster to recipients,” said Butler. “We’ve created more times per day that the exchanges are happening, to serve western Canada.” Larimer noted that a global trend is that “it’s not just the advent of real-time rails, it’s the enhancement of the batch systems.” In the case of the U.S. and Canada, as well as Australia and New Zealand, Larimer said it’s “happening synergistically, because if you’re looking at moving toward a 24/7/365 economy, you need your end users to have a choice.”