The ISO 20022 standard is a new standard developed by payments experts, and is intended to be a global and open standard for the exchange of financial information between institutions that are active in the payments sphere. The standard provides a uniform and structured language for transferring financial information, and thus improves the efficiency and automation of financial processes, and allows better integration between various financial infrastructures. The standard supports a wide range of financial processes, including payments, securities and trade, which allows flexibility and adjustment to various needs in the payments sphere. In addition, the standard improves the transparency and control over financial processes, supports international regulation, and helps prevent fraud.
The Bank of Israel is currently implementing the ISO 20022 standard in the main payments system operate by the Bank—the Zahav (RTGS) system, and its participants including the banking system and nonbank entities. With the completion of the transition expected in 2015, the Zahav system will operate in accordance with accepted international standards and will be in line with advanced economies worldwide that are implementing the standard. In addition, the Faster Payments system operated by the Masav company already operates via this standard as does SWIFT, which is active in Israel and also connects the Israeli Interbank activity. Within the framework of the process of adopting the standard, the Bank of Israel conducted an in-depth examination of the significance and impacts of the implementation of the standard, which contributed to its deep understanding and ability to adopt it in the most beneficial way.
The Bank of Israel sees the many advantages of implementing the uniform international standard, and therefore is interested in examining whether there is a need for broad-based adoption in all the payment systems in Israel—the issue of Standardization. In addition, the Bank of Israel is interested in examining if and how to create uniformity in the use of the standard, from various perspectives, in the payment array in Israel, for the purposes of developing business practices between payment systems and payment service providers—the issue of Harmonization.
In view of the above, the Bank of Israel, within the framework of the public consultation document, invites the public to submit comments on the adoption of ISO 20022 in Israel’s payments array. The goal of the public consultation document is to encourage public discussion in order to assist with the formulation of the policy in that area, which will improve the payments array in Israel.
The Bank of Israel sees great importance in the existence of a process that integrates consultation with as broad range as possible of stakeholders. To that end it is turning to the public and stakeholders in the payments ecosystem in order to receive information and stances, among other things on the following issues related to adoption of the ISO 20022 standard: advantages, disadvantages, challenges, significances, adoption timetables, whether there is a need to establish a work team to utilize the business advantages of the standard among payment service providers and customers in the Israeli market, from what perspectives is harmonization required, if at all, and additional aspects that may be needed when examining the issues. The information received from the public will help ensure that the decision regarding the shift to the new standard will benefit all users of the payment system in Israel.
We would be pleased to receive input until April 30, 2025.
Payment and Settlement Systems Department Director Mr. Oded Salomy said, “Pursuant to the complex multiyear project in which the Bank of Israel integrated the ISO 20022 standard in the Zahav system, the Payment and Settlement Systems Department is in the midst of examining the need to impose the standard in other payment systems that have not yet integrated it, and is examining the need for harmonization of the standard among the various payment systems, which will create business benefits for the economy. To the extent that there will be certainty that all the information required in a payment instruction appears in all the payment systems, the greater the probability that the information will increase the efficiency in areas such as compliance with AML and CFT directives, complex payment and purchasing processes between businesses, and more. I call on the public, financial institutions, fintech companies, banks, and payment system operators including participants that already worked with us and integrated the new standard in various systems, to take an active role in this process and to submit its comments and suggestions.
Attached please find a document regarding harmonization and standardization in the payment array via the ISO 20022 standard.
The Bank of Israel can be contacted through the following email address:
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