Financial institutions in the U.S. region have two options for clearing and settling instant payments using ISO 20022- The Clearing House (TCH) offers their RTP and CHIPS platforms, and the Federal Reserve Bank (FRB) is launching the FedNow solution. As per SWIFT, the current goal is to implement ISO 20022 messages for cross-border and domestic wire payments. The migration date is set to November 2023, with a coextistence period of two years to allow all institutions to meet readiness for a big-bang go live in November 2025.
The private-sector option is The Clearing House, an early adopter of the ISO 20022 standard providing the RTP network has used the ISO standard since the payment platform launched in 2017. TCH is rolling out their interbank payments system called CHIPS using the ISO 20022 standard across its system. CHIPS is the largest private sector USD clearing system globally, with almost $2 trillion in domestic and international payments clearing and settling per day. CHIPS uses a patented algorithm to match and net payments, which provides an efficient liquisity savings mechanism. CHIPS has approximately 50 direct participants and is the private-sector counterpart to the Federal Reserve solutions.
The Clearing House has announced their goal to provide a defined market practice and mapping guide to migrate cross-border payments into CHIPS legacy message format by early Q1 2022. Their current message format is being modified to include a tag to contain the ISO 20022 message, and expected to be available for bank testing by summer 2022.
The Federal Reserve Bank's new FedNow Service was announced in August 2020 and is scheduled to launch in 2023 with core clearing and settlement capabilities and use of the ISO 20022 standard. The FedNow solution will bring more than 10,000 financial institutions on board and service more than $5 trillion payments each day. Aside from banks, FedNow is aimed to meet the needs of businesses for faster payments.
The FRB announced that the FedNow is running a Pilot Program with over a hundred organizations participating to support development, testing and adoption efforts of the service. For example, five regional banks and three credit unions in Northern California are going to test. Also the FedNow began a large community in 2021 that provides communication, feeback on features, use cases and testing support.
Both solutions need to be ready with all of their members by November 2023. And there is a lot of concern regarding what technical roadmap to implement to meet the tight deadlines. Archie helped the Netherlands acheive ISO 20022. For more information on how Archie can assist your financial organization, please email email@example.com.