Standards for payments and reporting tend to ignite passions and controversy, and the Single European Payment Agreement (SEPA) proved the point at the Sibos 2010 conference, held in Amsterdam in late October. European banks, companies, and other interested organizations seek and end-date on SEPA adoption, which thus far has fallen far short of expectations.
While Europe struggles toward a unified payments system, the United States puts what it can into practice, building in compatibility with international standards. The Federal Reserve Banks, for instance, announced its new international ACH payments product and reported in a Sibos session on its initiative to provide extended remittance information in Fedwire transfers.
Implementation of extended remittance information has been delayed a year, to November 19, 2011, so that banks can make the systems changes needed to support the data. Fedwire’s new remittance information is structured using ISO 20022. “We thought the need was unique to the U.S. but are seeing worldwide need for more remittance data in payment structures,” said Lauren Hargraves, senior vice president at the Federal Reserve Banks.
Indeed, the drivers of payments standards and initiatives likely will be large corporations making payments to suppliers around the globe, noted Jeremy Kidd, IT and business manager in the global treasury and insurance section of Cargill, the international food and agricultural concern. Cargill structures its financial information using ISO 20022 so that all data can move through the entire financial chain, from the initial payment through bank account reconciliation.
This “superstructure of information,” as Kidd called it, allows each entity along the way to have access to whatever information it needs for automated processing, without requiring any one entity or supplier to process or accept anything unless they choose to. The exception, however, is that every entity in the financial supply chain must accept and pass through all of the formatted data, whether they need it.
“The biggest problem we face is that some links in the [payments] channel can’t handle all of the information we send,” Kidd said. “With payments to Europe, all of the XML information is lost in the clearing system, so it isn’t available [to receivers] on the other end of the pipe. . . . It only works to its full extent if everyone supports it, and if everyone doesn’t support it, it isn’t a standard.”