Is Harmonization Running Out of Steam?

Required knowledge

• Familiarity with the ISO 20022 standard

Let’s hope not! But it is precisely because there are some doubts that it is important to take a closer look at the developments in Switzerland so far, from the conversion of the Swiss financial center to ISO 20022 messages in the SIC system and at the customer-bank interface, all the way through to the merging of various solutions into today’s eBill platform and the introduction of the QR-bill. This was accompanied by the rapid introduction of EBICS as the standard interface and the almost complete conversion to IBAN. With the exception of LSV+/BDD, where various legacy formats are still widely used in addition to ISO 20022 messages, payment transactions in Switzerland are almost exclusively based on ISO – ISO 20022 for orders and reports, ISO 19005-3 for PDF/A-3 for eBill, ISO 13616-2 for the IBAN – or on established industry standards such as EBICS. One of the few exceptions is the Standard Creditor Reference, which has been in use for 50 years and for which the payment parties still predominantly rely on the proprietary variant (QRR reference), although an alternative would be available in the form of the ISO 11649 Structured Creditor Reference. However, this has also been included in new offers and reports. In this respect, the Swiss players can look back with pride on what they have achieved.

Progress Is Also Being Made at Global Level

The ongoing migration in the Swift network to ISO 20022 for payments raises hopes of a global push towards harmonization. The SEPA payment area, which is also important for Switzerland, has shown that this push is possible to a certain extent. However, Swift’s recently adjusted timetable makes it clear that the transition will take some time. For November 2025, the focus is on order messages (e.g., MT103 or MT202), while investigation messages will follow later.

No end date has yet been set for the equally important reporting messages (e.g., MT900/910, MT940/2). Experience in Switzerland shows that the full benefits and new possibilities can only be exploited once the changeover is complete. Nevertheless, the global changeover is an enormous challenge, especially in a network with long-established special cases. But postponed does not mean canceled.

The G20 countries are also committed to simplifying global payments. Under the leadership of the BIS, the Committee on Payments and Market Infrastructures (CPMI) has proposed far-reaching measures to reduce prices and improve access for the general public. Harmonization of payment requirements at the data element level and in terms of processing and availability to market participants is a key objective. Politicians and regulators are pushing in this direction. At the same time, the HVPS+ is committed to and plays a key role in the harmonization of central infrastructures.

The Cost of Harmonization and Regulation

Harmonization and standardization do not come free. Standards limit the freedom of market participants because they have to follow rules and are not free to decide on product features. They also have to support things that may not be relevant to them or their customers. Another obstacle is that local or regional regulations often conflict with overarching harmonization efforts.

In Europe, forthcoming regulations such as the comprehensive Direct Debit Regulation will have a profound impact on the definition of services offered by financial institutions. This means that a SEPA payment will have to be processed differently from another cross-border payment. The markets concerned therefore have little incentive to work towards further harmonization. If the requirements are so different in substance, it is irrelevant whether they are also different in design. Regional regulators can thus hinder global harmonization.

The Benefits of Voluntary Action

In Switzerland, we have been spared overregulation. Here, market participants are relatively free to decide when and how to make adjustments. Nevertheless, it is often argued that premature obedience and good behavior are unnecessary cost drivers. However, experience shows that the sooner something is done, the sooner you can move on to other things, such as new perspectives or offerings. You also have more time to make any necessary adjustments. It’s like getting to the train station or airport a little earlier so you can buy something for your trip. And isn’t it great that customers appreciate careful and sustainable implementation?

The excuse that switching to a new message version or article extension is useless is false. If you don’t need certain features, the price of harmonization may be higher. But overall, it is cheaper if everyone moves forward together. You never know when a new service will be needed, and it is cheaper for everyone if there are not countless versions running in parallel. Last but not least, this efficiency gain ultimately benefits all market participants.

Therefore, stakeholders should recognize the overarching benefits of continuous harmonization and act pragmatically, economically, and proportionately – like an efficient model student who does not overdo things at the start and run out of steam.

Martin Walder
Head Billing & Payments Standards, SIX