December 1, 2024—In June 2022, the Federal Reserve Banks announced a multi-year Fedwire® Funds Service project which will culminate in the migration to the data-rich, international ISO® 20022 messaging standard for wire transfers in March 2025. This migration represents a significant milestone, a first step in modernizing legacy U.S. payments rails, ensuring the U.S. payment system remains a global market leader.
We are pleased to report that our dedicated technology CUSO, Vertifi Software, completed its FedLine® certification in April 2024, and is actively working to update its systems and integrated services in accordance with the Fed’s requirements. Service users can expect upgrades to our administrative portal and platform for incoming and outgoing domestic wires.
The Fed’s decision to adopt this global standard is both a strategic and a practical one. The common language is already used for many business applications including trade services, cards, and foreign exchange. The Fed built its own FedNow® Service to the ISO® 20022 standard. And, the Fedwire® Funds Service migration forwards global interoperability by aligning another channel of the U.S. banking system with uniform standards already or soon-to-be adopted by existing and emerging, payment, clearing, and settlement systems in other counties. Migration to the ISO® 20022 standard is expected to grow quickly as the messaging language becomes a universal standard for all major infrastructure, treasuries, application providers, corporations, and financial institutions.
Additionally, financial institutions and their business clients have long sought to update the antiquated and slow methods of processing domestic and international B2B payments. ISO® 20022 provides a common language, or data “dictionary,” a structured format, and processing method for payments, cash management, and remittance information that is expected to vastly improve end-to-end efficiency. It is considered essential to move the payments industry from legacy batch file systems to innovative real-time platforms. And, with the aim of creating consistency, agencies supporting the Fed’s migration to ISO® 20022—including the Accredited Standards Committee—have released a market guide to simplify integration of ISO® 20022 remittance data into Accounts Payable and Accounts Receivable systems and providing real-world examples of the prescribed format.
Detailed information on the Fedwire® Funds Service ISO® 20022 preparedness, industry readiness, and timeline is available on the Fed’s website’s ISO® 20022 Implementation Center. We will provide our member credit unions further information and service notices closer to the 2025 implementation.