Introduction of the Structured Address Decided

Required knowledge

• Knowledge of ISO 20022 standard
• Prior knowledge of address data storage

With the migration of the SEPA schemes to the new ISO 20022 message versions (V 2019) in March 2024, it is now finally possible for SEPA transactions to transmit the address of a payment participant in a “structured” way. While this may be new to many in the SEPA, it has long been part of everyday life in Swiss payment traffic at the customer-bank interface. Our banks have ensured that, depending on the network used, the address is either forwarded in a structured form (SIC RTGS, SWIFT CBPR+) or merged into two address lines. As a result of this approach, more than 75% of all addresses forwarded by payers are already structured in the SIC system. Many banks have already adapted their own systems such as online and mobile banking or their internal applications and require the address to be entered in structured form. It can therefore be assumed that the Swiss payment traffic can be converted without major problems by November 2025.

New “Tolerance” in Switzerland

However, a closer look at the data shows that the separation of street name and house number can cause problems. This is for the simple reason that this separation is unusual outside of payment transactions. In an international context, this makes sense because there are different conventions for where the house number is placed – before or after the street name. This results in combinations that are difficult to interpret automatically – for example, 15 66th Street: does this mean house number 15 on 66th Street? In processing, the address is used almost exclusively for verification and control purposes, whether for correct assignment, money laundering prevention, or sanctions control. None of this is a problem in Switzerland and Liechtenstein, where the structure of the address is uniformly regulated by law. For this reason, the Payments Committee Switzerland (PaCoS), as the standardization body for the Swiss Payment Standards (SPS), has decided to introduce the following tolerance in Switzerland: The house number may also appear in the “street name” element, provided the address is correct. This applies to all channels, e.g., pain.001. This is now also allowed for the structured QR-bill.

PaCoS has also decided to keep the current path for the customer-bank interface and to provide the structured address. In order to take into account the special circumstances of financial institutions with strong international operations and their clientele, the SPS will allow hybrid addresses as a banking offering. Its introduction will affect the receipt of payments and the message formats for credit and debit advice, account reports, and statements. However, bank customers will still have to deal with unstructured addresses, as not all postings originate from payment transactions.

Compromise Abroad

Internationally, the situation is less clear. Only since the introduction of ISO 20022 messages in the Swift network for cross-border payments in March 2023 is it possible to transmit an address in a fully structured way. This means that most stakeholders are only now getting to grips with the issue and are finding that not all address systems in use around the world fit into the prescribed structure. And since, from a regulatory point of view, the town and country, i.e., the legally relevant domicile of a party, must be unambiguously declared, the following compromise now applies: One takes the structured elements as intended and allows the option of additionally entering the “address line” element twice if the information cannot be provided with another element. The specification of the town and country in the elements provided for this purpose is always mandatory. This compromise solution is based on the possibilities of the respective ISO 20022 base messages and therefore only requires an adaptation of the business and validation rules. This new address type is called the “hybrid address”.

If a decision is made by the end of November 2023, Swift should introduce this address type for cross-border payments according to CBPR+ with the standard release in November 2025. Whether this will also be the case for SEPA schemes will be seen next year. Due to the close integration of the central Swiss infrastructure with the international banking business, it can be assumed that this adjustment will affect both the SIC system, in particular for forwarding (payments with a party abroad), and possibly also the services for SEPA payments. At the customer-bank interface for domestic payments, the structured address applies, as mentioned above.

Martin Walder
Head Billing & Payments Standards, SIX