Épisode 29 : La Charte d’interopérabilité des paiements HVPS+ ISO 20022

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Elizabeth (Liz) Dempsey:
Hi, everyone, welcome to The Pay Pod. I'm Liz Dempsey, lead of Event Communications and Content at Payments Canada, and I'll be your host. Today, we're talking about ISO 20022 specifically as it relates to the High Value Payment System Plus (HVPS+) ISO 20022 Payments Interoperability Charter, which was developed to enable the continued evolution and interoperability of the ISO 20022 standard for high-value payments. The HVPS+ group who developed the charter is made up of market infrastructure representatives from around the world, including Payments Canada, and their mission is to drive best practices and proper usage of payment messaging standards for interoperability and harmonization across high value payment systems.

Today, I have the pleasure of being joined by two members of the HVPS+ group, the policy manager of the RTGS policy implementation team at the Bank of England, Elizabeth Leather, and the senior ISO 20022 analyst here at Payments Canada, Karl Lee. Welcome to you both.

Elizabeth Leather:
Thank you very much.

Karl Lee:
Thanks for having us.

Liz Dempsey:
This is the first time we have two Liz’s on the podcast. I'll do my best to distinguish us, Liz.

Elizabeth Leather:
Looking forward to it. Thank you.

Liz Dempsey:
So now let's get right into questions. And I'll start with you first, Liz. And this is a big question. What is the ISO 20022 Payments Interoperability Charter? And if ISO 20022 is an open and global financial messaging standard, why do we need an interoperability charter?

Elizabeth Leather:
Well, you've asked a really, really big question, Liz. And I think you have to go all the way back to the beginning. So you start with ISO 20022 as a standard, it's a data standard ISO covers standards all across the world, like from baby car seats for safety purposes to combine harvesters, where there's a product or a data transmission, you'll probably find a standard, and that it's exactly the same for payment messaging. And if you think about payment messaging, you're transferring information or data from one place to another. So, it seems reasonable that you'd have a standard for that. And ISO, they get together groups of payment experts to say okay, what should go into these particular different types of messages. And therefore, you get all sorts of different fields of data that you can fill in for payment messaging, it evolves, we're on newer versions now of these different payment messages with all sorts of different choices of data compared to back in 2019, when a lot of payment standards, a lot of implementations based their standards on. Evolution means that you can turn fields on, you can add fields for new purposes, etc. But what that also means is that we, for example, at the Bank of England might choose to use certain fields to classify certain things, let's say postal addresses. But Karl, you guys at Payments Canada might have made a completely different choice. But then when we want to send a message between ourselves between the UK and and to Canada, how do we get the information there, if there's not the ability to put it in the same format in the forms, you get breakages, you get halts in the payment processing, it stops the payments time, it decreases the speed of the payment messaging. So what you really need is lots of people doing the same thing in a similar way. So within here, we go to your interoperability piece. And it's where HVPS+ comes in. The data standard, the ISO data standard is huge. And we provide a kind of implementation version of that, we're recommending best practice, these are the fields you should take. These are perhaps how long you should band the data for, these are how many occurrences of the data you should have. And we are giving you a guideline internationally to which to follow you know from your domestic but also for your cross-border purposes in order to align with that. Now, you then layer on top of that everyone trying to do the same thing, who are you going to follow? And HVPS+ with its group of MI, so I think we're up to about 16 market infrastructures at the moment. Plus representatives from other groups and financial institutions have come together to say okay, what information do we need to share? And do we need to follow in order for us to maintain that interoperability in doing the same thing? And that's where the charter comes in. I'm going to hand over to Karl actually to talk a little bit about the charter. So I'm really conscious that I could go on forever about data standards. But you know, Karl was also part of the formation of the charter, and then can talk from his angle about what's really key for him.

Karl Lee:
Thanks. I'll call you, Elizabeth just to avoid the different Lizs’. But yes, Thanks, Elizabeth. I appreciate that. And I'm just going to add on a bit of context to what Elizabeth was saying about how the ISO 20022 standard is a global financial messaging standard. And it's extremely flexible. So the evolution provides that flexibility, and has so much flexibility that it has enough to support implementations for different payment messages, and for different jurisdictions to implement this around the world. And so with that flexibility comes a lot of complexity. And the risks that we actually are seeing today is that different jurisdictions are implementing ISO 20022 in different ways. And what we're trying to do with the charter, is we're trying to take these different dialects of the same language that these jurisdictions are using. And we're trying to get them as close to each other as possible. So that although yes, we provide that different dialect of language, we're still speaking the same language. And that will help us hopefully, with the interoperability between the different jurisdictions, it'll bring a seamless transition from the cross-border payment space, to the domestic payments space, and allow for more straight-through processing and less friction from end to end payment lifecycle. An example I think of and I always think about when we talk about it during our meetings is we have so many different identifiers, for individuals, for corporations, for banks, the way they identify themselves. So for example, in Europe, they use the IBAN. The IBAN consists of bank information, I think of the account number for the individuals. In the US, they have the Fedwire ABA, which represents the banks in the US. And even in Canada, we have our Canadian clearing code, which is the CC code that has the bank number, branch number and account number. So there's so many different ways that each jurisdiction identifies themselves. And the charter will hopefully help provide guidance and best practices on when and where we could use these different identifiers.

Liz Dempsey:
This is fascinating and a little daunting, meaning it sounds like a lot of work. Karl, let's go to you next, how many market infrastructures around the globe are currently ISO enabled? How many have plans to implement ISO in the next, say, five years? And then Liz, how do you oversee all of these entities to ensure compliance?

Karl Lee:
Yeah, it's kind of funny when I tried googling this, I tried to see how many market infrastructures are live with ISO 20022, and it's not easy to find, actually, it's very difficult to find a list of market infrastructures. But there was a group payments market practice group PMPG, that actually provided a document. I think it was Q1 of last year that they provided this information. And in there was a list of market infrastructures that were live. And back then I think it was 25, or more roughly 25 or more market infrastructures that were allied with ISO 20022, and a lot more planning to go live with it in the next coming years. So what we have to really think about is the end of coexistence, meaning the end of the MT and MX coexistence is going to be November 2025. Meaning we're expecting a lot of the market infrastructures to be live with ISO 20022 by them. So another interesting fact that I found was that the PMPG group, actually they removed that list from their site, because they were saying that it'd be hard to monitor and track all of the different implementations just because there are so many. And rather than track the implementation, they decided to switch gears and actually look at the current MIs that are live with ISO 20022 and see which ones are harmonized with the CPI requirements. So the Committee on Payments and Market Infrastructure. And the reason why I bring this up is because actually HVPS+ team, they recently did a similar task where we looked at the HVPS+ plus guidelines, and to make sure that we're harmonized with the CPI requirements. And yeah, so I'll just pass it on to Liz to kind of see where how she sees us being able to oversee that the entities are in compliance.

Elizabeth Leather:
Thank you, Karl. I mean, I love the way you see cars switching between we and they, you know, we are part of these task forces actually going through these complicated data models ourselves to look at those updating. So when Karl and I say we and they, we’re actually part of sitting in these meetings, looking at the updates to these models, looking at the interoperability and so on, looking at harmonization cross border, and and you talk about compliance, so, you've got to remember the HVPS+ is a group of market infrastructures providing guidance on best practice and what one of our members often nice to say is we're providing the templates for people to follow in order to harmonize. So there is no compliance, we're not going around saying you're not doing X, you know, we're going to come round and talk to you, you know quite vehemently about what you're doing. It's in everybody's best interests to align and to harmonize. If you are out of step with what others are doing, you risk being the one in the global payments chain, who is stopping payments getting through, you're decreasing the speed and efficiency of payments, you actually going contrary to the idea of actually having transferred to ISO in the first place, because a part of going to ISO is everybody harmonizing towards a one, similar payments, market practice, and sort of supporting this, this idea of improved straight through processing, interoperability, etc. So unfortunately, whilst we'd all like I think in the payments industry to walk around so those people that perhaps are not as quick off the mark in terms of transferring to ISO or migrating to ISO, or who might be making choices that they say might have to make firm domestic legacy purposes as well. So you've got to acknowledge that there is some diversion, because quite a lot of markets are primarily domestic focused, but a part of it is cross border. That essentially, we are looking to create a core nucleus of very large markets, which others can then follow. And just building on that, you know, all migrations are welcome to join HVPS+. Plus, we want people to actively part of saying, yes, these changes, we want these changes, and we'd like people to change, because that's part of evolution, improving the payments, or messages as they stand. There are other market infrastructures that were able are actually buying off the shelf, some of their implementations. So quite a lot of the people that face into HVPS+ plus, are directing their own implementations. But they're also people that are buying off the shelf, those certain products that will help them migrate to ISO 20022  without having to make their own choices. And the great thing about that is that those particular products are also following HVPS+ where possible, as well. So we are getting quite a lot of traction through our harmonization with the cross border networks CBPR+ run by Swift, and with these very large market infrastructures that are part of HVPS+ in order to sort of forge the way without having to resort to the compliance points. A very long answer to a fairly short but seemingly easy questions, sorry, LIz.

Liz Dempsey:
No, that's great. And in terms of numbers, can you tell us how many MIs are currently showing their support for the HVPS+ charter? And are there more showing interest in providing their support? Liz, let's start with you.

Elizabeth Leather:
Yeah, so if you think about it, we have probably about 16 organizations representing voting organizations and HRBPs plus, which represent about 14 to 15, large market infrastructures. Eight have declared support for the charter. And we also have endorsement from CBPR+, as well as PMP CI that Karl referred to earlier. You know, this is a huge success, because the aims of HVPS+ plus are really to get people to align. And it also wants to create alignment with cross-border networks as well. So with that, in, you know, support coming in, we're really, it's, it's almost like a global indication that people want to do the same thing. Yeah,

Karl Lee:
and I would just like to add to that, I think, what's important to remember is that as we get more entities using the interoperability charter, further implementation, you will you'll get other MIs looking inwards and saying, hey, they're pretty interoperable, they're pretty smooth in terms of sending messages to one another, there's a lot less friction, which might then entice them to join the HVPS+ charter and to have that implementation as part of their using that charter for their implementation. So I think it's a really good idea and I think it's great that we got MIs already showing their support, we got CBPR+ that’s showing their endorsement as well. I think it's just a really good plan going forward that we are hopefully aligning to one usage guideline going forward.

Elizabeth Leather:
I mean, just adding to what Karl said, so you know, Payments Canada have, you know, given their support, which is absolutely fantastic news, you know, I haven't I've got my HVPS+ cheer hat on but also you know, as we said at the start I'm actually from the Bank of England, and the Bank of England as well has supported the charter. We haven't really talked about it yet in terms of the kind of details of the charter, but they're really reasonable. If you had to broker a line or a compromise between, you must all do the same thing, too, we'd like you to do similar things in similar ways to achieve great results. That's what the charter has done. So the idea of the charter is that people follow the last two kind of or line with the last two usage guidelines of HVPS+. So like we said, a line and I've gone on and on about data rights, about data choices about what you turn on what you turn off how you use it, how you're sending that that data and using the payment, the payment messages for the purposes that ISO asks you to use them for filling in the payment messages in a similar way to everyone else's doing, it's really reasonable to ask people to use the last two implementation and then also to evolve as you're doing that, when we're not saying that you have to use X version and, and that for the, for the, for the payment aficionados out there, you know, there'll be very fixated on versions. And versions are, when ISO 20022 does its annual cycle, it will come out with a new version of a payment message, which an implementation or usage guideline is sort of layered on top to take cuts of those versions, you could have an implementation or usage guideline, on a certain version of a message that would be interoperable with, possibly with a previous version. So with this, the charter is being really, really reasonable. And I'm really conscious, some of your listeners might be lost with that particular piece. But those people who are really up on the ISO terminology, this will really make sense to them in terms of harmonization, and so on. It's about the implementation, really, rather than about taking all of the base data and using it in exactly that format, and having to go along with that piece. And then there's the information sharing as well, right? If you know what other people are doing, then you can if you're a new implementation coming along, you can go okay, all right, they're using this type of message for this. And they're using these kinds of implementations. They're aligning with HVPS+, oh, we should do the same. So it's a self fulfilling piece of activity that helps sort of guide people into using the same principles and activities themselves. Okay,

Liz Dempsey:
Now, I really understand the market infrastructure part. But how does the MI get all of the participants on board? Liz, could you tell us how the UK is proceeding here? And Karl, what's Canada doing?

Elizabeth Leather:
Well, so from the Bank of England perspective, we have done two things. We have needed to align a change cycle with the global change for ISO 20022 so that's kind of really kicked off HVPS+ has formalized itself to say, OK, we will start putting out usage guidelines every year on a certain date. And these are when we will make decisions. So the Bank of England has put in place a change management cycle. And of course, we've got to talk to our participants about that change management cycle as well. As part of that, we also asked them about their thoughts on the charter. And if I was to say to you, someone comes along and says, Well, we've said we're going to align globally with what other people are doing. Yes, please. We would like to align with the cross-border network as well, because, you know, I mean, CHAPS, which is the high value payment system that the Bank of England runs is circa 40 per cent. Cross Border business, we're, this will also really help us align with cross-border networks. Yes, tick. Yes, please. So from our point of view, you know, we surveyed our participants and it was absolute. This is a great idea. Thank you. I'll hand over to Karl, because I'm, I'd be interested to know if his participants were similarly inclined.

Karl Lee:
So actually, I didn't realize how similar it is from the UK and Canada. So here in Canada, we also work as a collective meeting, we work together with our members on upcoming changes to get their opinions and feedback. We also make sure though, that the changes work best with the Lynx scheme, which is our high value payment system here in Canada, their scheme rules and application design. So when we went live, and I'm gonna go back to 2023, when we went live, we created the Lynx core specifications with the members. And the path then was to align ourselves as closely as possible to ECBPurePlus. So we're trying to get, because we do have a lot of members that do cross-border payments as well as the domestic payments. There were a few minor changes to ensure that the messages were tailored to make them fit for purpose for the length scheme, rules and application to design and something that comes to mind for me is the local instruments. So here in Canada, and especially within the Lynx payments role, we do use local instruments. So that is something that we kind of strayed away from the CBPR+, but we made it use for local purposes only. But we insured everywhere else wherever possible, we were aligned with CBPR+ to foster that interoperability, which everyone is always looking for, right? Like, it's easy to create a message specification for your domestic market infrastructure. But does that work globally? Right, so it's going to be very similar to our updates for November 2025. We are going to be working with our members, we are going to be aligning ourselves now with HVPS+. And not CBPR+ anymore, but with HVPS+ plus going forward. And yeah, we just have our discussion with the members. And we work together to create message specifications that will work both domestically and cross border,

Elizabeth Leather:
I’d just like to refer to what Karl was saying. So we talked about the CBPR+ nature, EPS plus one of the key aims for HVPS+ is good harmonization, or alignment with CBPR+. And why that's really key is that financial institutions that sit in between US market infrastructures, they bear the burden, if the standards or if the market implementations diverge from something that from the from the cross-border implementation, so there might be translation, there might be different ways of doing things, and so on. And so if you imagine they might be taking in a letter and sending out a different letter with different information just in order to deal with the different market implementations. And then it's not just dealing with, you know, a CBPR+ or market implementation CBPR+, it could be that they are interfacing globally with lots of different market implementations. It's not just the message that’s sent, it's all the back office systems, it's all the databases, not just for the FI, but also for the initiator of the payment, which might be a corporate or another financial institution. And this kind of information that's being sent is all the way down the line. So if we can as much as possible, acknowledging like Karl said that we have domestic priorities as market infrastructures, regional priorities as market infrastructures, but also harmonization priorities on a cross-border and global basis as well, then we're really going in the right direction with HVPS+.

Liz Dempsey:
So where are you in the charter process? Karl, could you talk about the big milestones to date, then Liz, can you tell us what's next?

Karl Lee:
So actually, I've just recently joined the HVPS+ group, I think, in Q4 of last year, so I'm quite new to the group. But I've seen a lot of milestones that we've actually achieved. So one of them was the new HVPS+ website was created. There you can find mission statements, scope, you can find the charter that's going to be published. And we've created the HVPS+ LinkedIn site, just for visibility for folks to know what work we've been doing up to this time. And the biggest one definitely is, I just mentioned it, but the publishing of the charter on the website, which will show the MI support, which will show the different principles that the charter will provide. I think that's the biggest milestone that we've achieved. And I believe it's going to be published either this week or next week, please correct me if I'm wrong.

Elizabeth Leather:
HVPS+, since probably about the middle of last year has been moving at pace to formalize itself into something that is can create predictable change on a global basis for MIs that follow HVPS+, and that is really, really key because I talked about harmonization with CBPR+, how can you harmonize with something if you've got a moving target. So there's been a lot of activity in the background to sort of bring it so that it's got structure around its activities, but also so that people know about it, if you want to know about what changes are happening, you want to know, when they're happening, there's the website, it's on there. If you want to request changes, that's accessible there as well. I would say that there are some restrictions about who can request changes and so on. But all the relevant information is there and member market infrastructures are also listed there as well. You talked about what next if I can split that into two: what’s next for HVPS+, so we're going into our first round of change cycle. So this is to produce usage guidelines in 2025 for implementation by many market infrastructures in front running it because their migrations are happening early and so on. And we're looking at things like Karl said like CPMI, how we can tailor that more closely, maybe looking at upgrading the versions of the message, the base message, and then other other fixes such as more alignment with CBPR+ and so on. That is what's next for HVPS+, plus is basically forming those groups, making sure that people understand where we're coming from, and then producing those usage guidelines that market implementations can then take and tailor for their own purposes. And that means that's providing predictable change throughout. What's next for the charter. Well, I really welcome all and further expressions of support for the charter, I would welcome people contacting members of HVPS+ if they want to talk about giving their support or joining HVPS+ plus. And I would also look for that charter to evolve in other ways. And this is perhaps an ambition of mine. HVPS+ has really kind of just nailed it in the last year for English expression for for high value payment systems, there is lots of activity in the kind of instant payment space, whether they're using payments messaging, or whether they're using sort of APIs, whether they're forming smaller networks and so on. Quite often, they're saying they're using ISO as a base for the kind of data standard that they're using. As they're doing quite a lot of collective stuff on a cross-border basis, you might have heard of some of the groups that are getting together across borders to different countries talking to each other. It might be interesting to see if they pick up this harmonization way of going and say it and cross border data models that we're promoting, in order to see whether or not that fits for them as well. So that's a kind of secret. Well, it's not so secret, no ambition of mine, but that's where it could go. You know it. There are principles and objectives that are endorsed by the charter that are beneficial for everybody in the payment industry.

Liz Dempsey:
And just before we wrap this up, let's look further ahead to the future. Do you see the interoperability charter being applied potentially to other payment systems in the future? And if so, what could that look like? Liz let's start with you.

Elizabeth Leather:
I think that's what I was alluding to. And apologies if I front run that question in my previous one. I do see it being applicable to other payment systems. I mean, when you say other payment systems I'm sort of talking about, we talk about high value payments, there are sort of secondary pieces, which is like the corporates or financial institution space, which also has a data standard attached to it, you have the faster payments arena, which also have their own sort of different activities and so on. But essentially still doing payments to charter has the right objectives behind it. Lots of instant payments have cross-border ambitions. And this can cover some of it. What would be really great is for those kinds of areas or those kinds of activities to start thinking about doing something similar, either forming themselves up or building themselves up so that they're seeking guidance. So in one place, or following principles from certain areas evolving in the same way using the same data standard. I'll hand over to Karl, because I know you've got regional specifics as well which play into this as well.

Karl Lee:
I definitely agree with you in the sense where you know, we talk about high value payment systems here because we are these HVPS persons, but I can't see why you wouldn't be able to impact other payment systems, like you're talking to corporate a bank, for example, which Payments Canada recently just did. We did provide some guidelines for the corporate bank space here in Canada. Honestly when I look at our interoperability charter, and what we're doing here. I look at it like a trickle down effect, where we provide the guidance to HVPS+ market infrastructures, we give them best practices and proper uses of the standards, which will then drive interoperability and as other more domestic use payment systems. See, they may want to align themselves with HVPS+, and you did allude to it earlier, where the principles of the charter itself are very lenient, in the sense where we have three principles. One of them is if you have a live implementation, you want to align yourself with the HVPS+ charter, all we ask is that you align yourself with the most recent, right? If you do have a new implementation that you're trying to implement, and you want to use the interoperability charter, we ask that you align yourself to the newest HVPS+ plus guidelines. And then if for whatever reason you need some domestically specific specification, sure, we welcome that you are allowed to do that, as long as you provide a reason, as long as you're open with why you are changing the way you're changing, and because of how easy it is to use this charter for your implementation, I honestly feel that it could be used really in any payment space when you think about it, and then we'll build that interoperability between both domestically and between jurisdictions. So yeah, I completely agree. I think it could be used pretty much with any payment system when you really think about it.

Liz Dempsey:
Karl, thank you both for such an insightful conversation. It sounds like 2024 will be an incredible year for ISO interoperability.

Elizabeth Leather:
Thank you so much, Liz. And thank you so much for giving us the opportunity to talk about the charter, you know, both from an HVPS+perspective, from a Bank of England perspective and from a Payments Canada perspective, thank you very much for the invitation as well. I really would welcome any further market infrastructures if they want to express an interest in the charter, or join HVPS+ or talk to Karl or myself. You know, we'd really welcome that. And thank you again for the opportunity.

Karl Lee:
No, thank you, Elizabeth, for joining us.

Liz Dempsey:
Before we go, be sure to stay connected to all things payments, visit our website payments.ca. And sign up for our newsletter, the Exchange, and be sure to visit the summit.ca for the latest on The SUMMIT, our annual payment conference happening this year in Toronto, from May 29 to 31. I'm Liz Dempsey. Thanks for joining us for this episode of The PayPod.