What is the Real-Time Gross Settlement service?

• The Bank of England’s real-time gross settlement service (RTGS) holds balances in accounts for banks, building societies and other institutions. These balances can be used to move money in real time between account holders to deliver final and risk-free settlement, whether for individual CHAPS payments, the CREST securities settlement system or retail payment clearings like Faster Payments.

What is the vision for the new service?

• Our vision is to develop an RTGS service which is fit for the future, increasing resilience and access, and offering wider interoperability, improved user functionality and strengthened end-to-end risk management.
• The renewed RTGS service will not only replicate the functionality provided today, but also deliver a range of new features and capabilities for payments and settlements between financial institutions.

What is your role within the RTGS Renewal Programme?

• I am responsible for the introduction of ISO 20022 messaging in RTGS and the CHAPS payment system, which will replace the current SWIFT MT messaging. This includes liaising with SWIFT and other payment systems also moving to ISO 20022, including Pay.UK for its New Payments Architecture.

What is ISO 20022 messaging?

• ISO 20022 messaging creates a common language for payments data across the globe, which allows enhanced data to be carried, in a more structured and enriched format than the current SWIFT MT standard. When SWIFT retires MT messaging for its cross-border payments service in November 2025, ISO 20022 will become the new global standard.

What are the benefits of ISO 20022?

• Better data in payments promises to deliver significant long-term benefits for the economy. Structured addresses mean performing anti-money laundering and sanctions checks is easier and more accurate (in particular, reducing the number of ‘false positive’ alerts that arise from the current unstructured data). It will also be quicker for firms to identify and reconcile payments from their customers – for instance by using the invoice reference field.
• When Pay.UK introduce the New Payments Architecture, it will also mean that for the first time in the UK, both retail and wholesale payments systems will work to the same message format. This will provide greater harmonisation, enhanced resilience (as payments can be sent via either CHAPS or NPA, without reformatting), less manual intervention and better analytics.

What should institutions be doing to prepare for the RTGS / CHAPS transition to ISO 20022 in April 2023?