ISO 20022: why the new banking system already affects the traceability of your company’s international payments

ISO 20022 is a global standard for the electronic exchange of financial data. It replaces traditional payment and transfer formats by providing a structured, precise, and information-rich language.

Banks are adopting it because it enables them to:

• Include more complete data on the payer, beneficiary and purpose of the payment.

• Improve the traceability of operations.

• Reduce errors and speed up clearing processes.

• Use a common international standard.

With its recent adoption by key infrastructures, many businesses are already making international payments under this new framework, even if they are not fully aware of it.

The adoption of ISO 20022 brings direct, measurable changes for any company that sends or receives funds abroad. Among the most relevant effects are:

More mandatory data in each payment

Commercial references, invoice identifiers and additional details are requested, which may require reviewing templates, ERPs and administrative processes.

Fewer errors and returns

The standardised format reduces incidents caused by missing information or data inconsistencies.

More efficient accounting reconciliation

With more context in each message, companies can link payments to documents and transactions more quickly and accurately.

Enhanced traceability in the bank

Banks now have more granular information, which improves internal controls, audits, anti-money laundering procedures, and compliance reviews.

Although ISO 20022 and blockchain serve different functions, they share two key elements: traceability and precise data structuring.

Blockchain provides an immutable, distributed record, while ISO 20022 ensures that the information describing a transaction is transparent, standardised, and universally understandable.

Recent analyses indicate that ISO 20022 can serve as a technical bridge between traditional banking and blockchain-based systems, as both require structured, verifiable information to interoperate. However, it is essential to remember that ISO 20022 is not a blockchain and does not incorporate consensus mechanisms, decentralisation, or immutability.

What is certain, however, is that the coexistence of both models enables the construction of more transparent and interoperable financial systems.

Several technical analyses agree that the widespread adoption of ISO 20022 creates fertile ground for the future integration of CBDCs (central bank digital currencies). Although a CBDC depends on regulatory and monetary policy decisions, its operation requires:

• Interoperating with banking systems and international networks.

• Managing advanced traceability.

• Integrating with both traditional and digital systems.

The data standardisation provided by ISO 20022 aligns well with these needs.

The data standardisation introduced by ISO 20022 naturally aligns with these requirements. This does not mean that a CBDC will be implemented immediately. Still, it means banks, regulators, and payment systems already have a shared technical foundation that could support their future rollout.

While ISO 20022 is not a tax regulation, its increased level of detail has indirect effects:

• It helps justify payments during audits or inspections.

• It provides more precise documentation, which is helpful in tax reviews.

• It improves the identification of operations, strengthening internal control.

These advantages help businesses manage their administration without creating new obligations.

Although the technical transition lies with banks, a few voluntary actions may be beneficial for businesses:

• Checking the data submitted to the bank for international payments to ensure completeness.

• Keeping documentation well organised (invoices, contracts, purchase orders) to take advantage of enhanced traceability.

• Asking the bank whether their international payment forms include new information fields.

• Sharing the additional information internally helps streamline accounting tasks.

These recommendations are optional and do not require technical changes or investment.

The implementation of ISO 20022 delivers automatic improvements:

• Greater traceability in every operation.

• Fewer incidents and errors in international payments.

• Clearer information for reconciliations and internal reviews.

These benefits are gained without businesses needing to take any action.

The progress of ISO 20022 forms part of a broader transformation of the global financial system: greater standardisation, increased automation and enhanced interoperability between platforms and countries.

This process, far from being a one-off change, marks a transition towards systems in which information circulates with greater precision, security and verifiability.

Businesses that choose to anticipate these developments and refine their internal processes will not only meet current requirements but will also be better prepared for an increasingly digital, regulated and technologically advanced international environment.

The implementation of ISO 20022 represents a significant step forward in the modernisation of the financial system: it increases traceability in international payments, standardises the information banks handle, and creates a more interoperable environment.

This new framework facilitates future connections with technologies such as blockchain and potential CBDC developments, without requiring businesses to make technical adjustments or assume new obligations.

It is a structural change that improves transaction clarity and security while keeping a business’s day-to-day operations stable and straightforward.