The South Africa Reserve Bank has adopted ISO 20022 certification that specifies the requirements for financial messaging. The International Organization for Standardization (ISO) has published ISO 20022 Certification to establish communication interoperability between financial institutions, market infrastructure, and end users.
ISO 20022 standards introduce a single message exchange mechanism system for all payments across the globe. This initiative was started by The Society for Worldwide Interbank Financial Telecommunication (SWIFT). SWIFT has mandated all users in its network to transit to this messaging standard by 2025. ISO 20022 standards require an organization to provide better-quality data in payment processing and settlements.
Implementing ISO 20022 certification requires adopting the SWIFT messaging format instead of the legacy proprietary messaging format. It introduces Extensible Markup Language (XML) to replace legacy format. It aims to enhance compliance and transparency. The International Organization for Standardization (ISO) promoted the use of ISO 20022 certification to provide increased regulation, eliminate cyber-security threats, fulfil customers’ demands faster, and implement a more cost-effective payment mechanism.
The adoption of ISO 20022 certification by the South Africa Reserve Bank demonstrates their efforts to modernize South Africa’s domestic payments infrastructure. The South Africa Reserve Bank owns the South African Multiple Option Settlement (SAMOS) system and adopted the new standard in 2022.
Extensible Markup Language (XML)
Extensible Markup Language (XML) is a language and file format. It enables the exchange of extensive data, including remittance details, the purpose of payment, the original source, and data of the final beneficiary, alongside extra supplementary data. Extensible Markup Language (XML) is a file format that stores, transmits, and reconstructs information.
It uses XML tags in the messages that provide a more detailed structure, a readable name for each element and distinctly show the beginning and end of each element. It is more detailed and useful from a technical perspective.
ISO 20022’s XML tags help organizations in the compliance process as it stores data in a structured way, whereas in the legacy format, data is stored in an unstructured way, and it becomes laborious to locate the correct information. In XML format, data is screened accurately, which enhances its readability.
The definition provided by XML tags can prevent payments from being incorrectly flagged due to sanctions concerns, as a word or phrase can be screened in context during the screening process. This can allow financial institutions to spend less time investigating incorrectly flagged payments, saving both time and resources.
Source – https://thepaypers.com/online-mobile-banking/south-africa-reserve-bank-adopts-the-new-iso-standard–1259149