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Mario Reichel of PPI: Leveraging ISO 20022 to Optimize Supply Chain and Trade Finance Management Platforms: Harmonized ISO 20022 for Cross-Border Payments – A Data Model Also for Blockchain Solutions in Logistics
PRESENTATION
Mario Reichel, along with Ayhan Koseoglu of PPI: Presented their knowledge of leveraging ISO 20020 to optimize supply chain and trade finance management platforms.
- PPI is a company providing software end-to-end solutions and consulting for the understanding and migration to ISP 20020 for financial transactions.
- Mario described the ISO 20022 international standard for data transport between financial service companies. This message standard is a common platform for the development of messages for the following:
- Is a modelling methodology to capture in a syntax-independent way financial business areas, business transactions and associated message flows
- Is a central dictionary of business items used in financial communications
- A set of XML and ASN.1 design rules to convert the message models into XML or ASN.1 schema
- The focus of ISO 20022 is to produce a single standardized approach(methodology) for the development of standards to be utilized during financial standards initiatives. It is a recipe defining specific rules on how to develop messages:
- ISO 20022 does not define the message standard itself. It specifies rules and a methodology for how messages are to be developed.
- Supported by the global SWIFT community
- SWIFT does not mandate migration. The decision to migrate is a decision to be reached by various stakeholder financial communities
- The ISO 20022 standard consists of a set of definitions and roles:
- It is a concept for the development of standards
- A single standardization approach(methodology, strict procedure) to be used for all financial standards initiatives
- A central financial repository
- Freely and openly available
- More than 740 messages are available free of charge on ISO20022.org
- Not just for payments
- 20+ organizations are involved along side SWIFT
- Supported by SWIFT
- SWIFT assumes the role of registration authority (RA)
- Is a service provider for the community
- SWIFT is not mandating a migration
- Communities decide if and when they want to migrate – also applies to new releases
- Not just XML tag standardization
- ISO 20022 is independent of network and syntax
- ASN.1 is an additional syntax
- Also a basis for API development
- In order to support non-file based communication consistently to the ISO 20022 data model
- Representation via JSON next to XML
- It is a concept for the development of standards
- Customer Credit Transfer Initiation V9 (pain.001.001.09)
- Is an XML based message format under the ISO 20022 standard
- Designed to streamline cross-border and domestic payment processes
- The successor to V9 message format and include a number of enhancements
- pain.001.001.09 = Business Doman + purpose + variant + version
- Covers the following business domains
- payments initiation
- payments clearing and settlement
- account management
- cash management
- securities trade
- collateral
- Trade Services Initiation
- Enhanced data richness
- Improved flexibility – more flexible payment instructions
- Increased security
- Improved interoperability
- A description of the “4 corners model” for payment systems was provided
- Bank agnostic to initial payments
- Adoption level is across the globe with:
- 70 countries
- 80% of the volume in near future
- Global Harmonization – CPMI (Committee on Payments and Market Infrastructures)
- Focuses on harmonization of data requirements for the use of ISO 20022 messages for cross border payments.
- The CPMI developed the data requirements for ISO 20022 in collaboration with the private sector.
- Presentation demonstrated(slides) the end to end of richer and better structured information
- Provides for richer data elements:
- category purpose code
- purpose code
- end-to-end reference
- ultimate debtor and/or ultimate creditor
- structured remittance info
- dedicated tags for LEI and UETR
- Under the CPMI data requirements are a core set of messages and 12 basic requirements:
- appropriate message for a particular business function
- ISO 20022 externalized codes for payments and payment related processes
- character set used for ISO 20022
- common time convention across messages
- unique end-to-end reference
- transparency on amounts, FX and charges
- unique account identifiers to the extent possible
- identify all Fis involved in a standardized way(BIC or LEI
- identify all entries and person involved in a structured way
- common minimum level of postal address – structured
- transport of customer remittance information across the entire chain by enabling structured or unstructured remittance information
- PDF report to the G20 entitled “Harmonized ISO 20022 data requirements for enhancing cross-border payments available online
- PDF available “Consideration for the use of Stablecoin Arrangements in Cross-Border Payments” through online search.
- A working Example of ISO 20022:
- EVONIK and THEMIS, two European chemical companies, have an automated bidirectional invoice settlement and payment process. Components of the solution(architecture) are:
- CORDA for security integration to their respective ERP systems through a standard information flow
- Smart contract for payment after automatic validation of the order plus confirmation matching.
- Nodes and wallets – payment absent any intermediary, cash on ledger
- E-money by licensed PSP in Fiat money
- EVONIK and THEMIS, two European chemical companies, have an automated bidirectional invoice settlement and payment process. Components of the solution(architecture) are:
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Attendees
Mario Reichel
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Michael Vander (Coface)
Faith Fatih Ozgul
Michael Darden, DFM Data
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