Changes coming to wire payments with the implementation of the ISO 20022 standard

What to know:

On July 14, 2025, the standard for electronic data interchange between financial institutions will undergo changes required by the Federal Reserve to improve the quality, efficiency, and transparency of financial communications. This new standard – ISO 20022 – will result in changes to wire transfers that are sent and received by First Financial clients.

ISO refers to the International Organization for Standardization and includes more than 170 member countries worldwide. This organization is responsible for developing international standards for a broad range of industries, including financial services.

In 2022, the Federal Reserve Bank announced the adoption of the ISO 20022 universal financial industry message standard to modernize the wire transfer process. This standard will replace multiple existing financial messaging (or data field) standards, including the Fedwire Application Interface Manual (FAIM) format, bringing greater consistency to wire transfer data that is sent using the Fedwire Funds Service. ISO 20022 will provide a standardized, flexible framework for financial information exchange.

ISO 20022 represents a major upgrade to the US payment infrastructure. It is an emerging global and open standard for financial services messaging that aims to provide a common language and model for financial communications across different types of financial transactions and networks.

With the implementation of ISO 20022, consumers and businesses will experience faster, more transparent wire payments. The new standard will enhance fraud detection and security, while reducing processing errors. Wire transactions will be better integrated with global financial systems, and more detailed remittance information will be included with each transaction.

Other benefits include:

  • Higher quality data than other standards, which means higher quality payments for all
  • Ability to adapt to new needs and new approaches
  • It is not controlled by a single interest
  • It can be used by anyone in the industry and implemented on any network

The Federal Reserve will implement the ISO 20022 standard for all U.S. financial institutions on July 14, 2025. First Financial Bank and all U.S. financial institutions will need to be fully compliant with the new messaging standard.

 

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The Federal Reserve Banks will implement ISO 20022 messages (or data fields) for both domestic and cross-border funds transfers, as well as all other inputs and outputs, from the Fedwire Funds Service (i.e., all message types, inquiries, reports).

Before now, remittances were historically sent with different forms and structures. A bank or a company might receive a $100,000 wire payment without knowing exactly what the funds applied to, so there could be multiple purchase orders in the same amount with no automated way of knowing how to match the payment to the invoice.

ISO 20022 provides a common structure for payments so systems can automatically match payments with their specific invoice, eliminating the potential for confusion, mistakes, and costly manual labor to sort out the purpose and details for each payment. All of this will aid real-time payments.

During wire transfers, ISO 20022 messages will use a common data dictionary that can carry a considerable amount of information, including:

  • Payment initiation (client to bank)
  • Interbank settlement (bank to bank)
  • Cash management (bank to client)

With ISO 20022, clients will experience faster and more transparent international wire payments. The new standard will enhance fraud detection and security, with less errors in processing. There will be better integration with global financial systems, and more detailed remittance information with each transaction.

The standards in use for payments today offer inadequate flexibility to adapt to growing client needs in the new global, digital economy. ISO 20022 is an improved standard that will address a wider variety of needs for today’s marketplace.

Single standard. Better data.

ISO 20022 will enable richer, better structured and more granular data end-to-end to be carried in payments messages – in short, quality data. Quality data means quality payments. This means more transparency and more remittance information for your customers which in turn means better customer service and better customer experiences.

  • ISO 20022 will bring improved compliance and efficiency, streamlined operations and customer experience resulting from a single end-to-end standard for international, domestic, high value, low value, and instant payments.
  • Clean data is key to instant payments, real-time settlement, open banking initiatives, and blockchain technology — but such details are often lost or garbled when sent between parties. The U.S. financial services industry is turning to the ISO 20022 messaging standard to better preserve this data.
  • Adopting the ISO 20022 message standard should help the Federal Reserve Banks meet increasing customer demands for richer data, help customers more easily comply with evolving regulatory requirements, improve the Fedwire Funds Service’s interoperability with other payment systems in the interconnected, global economy, and help customers enhance their client services.
  • ISO 20022 combines payment data and EDI information (other data related to a transfer not pertaining to the actual payment, such as who is paying whom and regulatory info), combining all that data into one place in standard fields.
  • Better use of data by banks will facilitate improved business decisions.

Efficiency and streamlining

ISO 20022 will bring improved analytics, less manual intervention, more accurate compliance processes, higher resilience, and improved fraud prevention measures.

  • Benefits will include improved global business communication, with better understanding of different meanings, standards, and formats.
  • Standardized message components can be used in data exchanges across the financial industry, leading to streamlined communication for payments, securities, funds, foreign exchange trading, and credit card transactions.
  • Banks and their clients can more easily match transaction amounts with the payment's purpose.
  • Users and clients will have reduced communication confusion, because:
    • ISO 20022 brings a global dictionary of common language that everyone can understand
    • Information can be processed and exchanged worldwide, clearly and consistently
    • Financial information can be more easily communicated between people and systems
  • As a free and open standard, it is flexible for users to add to the dictionary to help write global business standards.
  • ISO 20022 offers a web query tool for anyone to explore the ISO 20022 Dictionary.

The Federal Reserve will implement the ISO 20022 standard for all U.S. financial institutions on July 14, 2025. 

Yes. According to SWIFT – The Society for Worldwide Interbank Financial Telecommunications system – securities and payments systems using all major currencies have either already adopted ISO 20022 or are in the process of doing so. Real-time payments are also conducted using ISO 20022.

Terminology and formatting of messaging data fields will change. This may require changes to existing wire templates.