J.P. Koning: The Standard About to Revolutionize Payments

Sep 28, 2020 at 19:57 UTC.What will payments over the internet look like in 2030?A revolution in finance and payments.

ISO 20022, a new standard for communicating electronic payments instructions between financial institutions, will be taking over.

The International Standards Organization, an international non-governmental technical body founded after WWII, helped the industry settle on a standard definition for shipping containers by creating ISO 338, ISO 790 and ISO 1897.The principles that apply to shipping are equally applicable to payments and commerce.

The Faster Payments Service uses a modified version of ISO 8583, BACS uses Standard-18, and CHAPS uses the SWIFT MT messaging format.

The idea is to convert all existing payments systems from their own proprietary messaging standards over to ISO 20022.

Whether a payment is made in dollars over Fedwire, in renminbi via the People's Bank of China, or from euros to rand along SWIFT, a single unique payment standard will prevail.

The U.K.'s Faster Payments scheme, introduced in 2007, was one of the first real-time retail payment systems.

More upgrades came in the 2010s including Sweden's BiR, Singapore's FAST, and India's IMPS. Canada's Real Time Rail will be in place in 2022 while the U.S.'s FedNow real-time system is slated to arrive in 2024.By 2030, 24/7 real-time retail payments will be de rigueur not only in developed nations but also in developing nations in Africa, the Middle East, and South America.

Where do blockchains fit in all of this? In times past, blockchain advocates have pigeonholed centralized payments systems as archaic and clumsy.

In 2030, there will still be people who are excluded from the ISO 20022 real-time payments nirvana I've just described.