Fri | Mar 29, 2024

BOJ: New global payments system is mandatory

Published:Friday | April 29, 2022 | 12:13 AMHuntley Medley - Associate Business Editor
The entrance to the Bank of Jamaica, Nethersole Place, Kingston.
The entrance to the Bank of Jamaica, Nethersole Place, Kingston.
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Bank of Jamaica, BOJ, which coordinates the national payments system in Jamaica and chairs the statutory body, the National Payments System Council, NPSC, says the transition to a new messaging system for financial institutions is inevitable, and...

Bank of Jamaica, BOJ, which coordinates the national payments system in Jamaica and chairs the statutory body, the National Payments System Council, NPSC, says the transition to a new messaging system for financial institutions is inevitable, and not solely due to its own directive.

The shift to the ISO 20022 Universal Financial Industry Message Scheme, which is an upgrade of the current global SWIFT payment platform for the settlement of payments between financial institutions, is to happen over four years.

“ISO 20022 Universal Financial Industry Message Scheme is a global standard promulgated by the International Organization for Standardization, for sending payment instructions between local, regional, and international financial institutions,” BOJ said.

“In that regard, it is not a standard from the Bank of Jamaica; rather, it is a standard to which central banks and financial institutions worldwide must eventually adhere to facilitate interoperable payment systems,” the central bank said, giving further clarity to the matter in emailed responses to Financial Gleaner queries.

The BOJ had previously said commercial banks and other financial institutions would transition to the new back-office messaging system to make transfers faster and more seamless.

The requirement to move to the new system has been discussed by the various financial services industry entities represented on the NPSC, it is understood. The other entities represented on the council are said to include the Ministry of Finance, Ministry of Labour & Social Security, Accountant General’s Department, Jamaica Bankers Association, Building Societies Association of Jamaica, Primary Dealers Association, the Financial Services Commission, Multilink point-of-sale service provider JETS Limited, the Cambio Association of Jamaica, Jamaica Money Remitters Association, digital bill payments facilitator Automated Payments Limited, and the Jamaica Stock Exchange.

The NPSC was created by the 2010 Payment Clearing and Settlement Act. The modernisation of the global payments system through the messaging system upgrade will not directly affect all the entities represented on the council, but rather, the change to the new standard is primarily focused on participants of the BOJ’s JamClear-Real Time Gross Settlement System and SWIFT platforms, according to information provided by the central bank.

The JamClear-RTGS platform, operated by the BOJ since February 2009, is utilised for the settlements especially of large value and time-critical payments by commercial banks, other financial institutions and primary dealers in BOJ and Government of Jamaica securities.

JamClear is to be updated to facilitate both the ISO 20022 standard and the current SWIFT MT standards by the second quarter of 2023, the central bank had said earlier.

“The upgrade of JamClear-RTGS is being done in conjunction with the system developer, Montran Corporation,” BOJ told the Financial Gleaner.

“The value will be listed as part of the bank’s first-quarter contracts award report for submission to the Integrity Commission.”

Montran Corporation, a New York-based firm operating in 70 countries, provides comprehensive payment, cash management and securities solutions to the financial services industry.

Last year, JamClear processed $6 trillion local currency transactions and US$13.8 billion in foreign currency, according to the payment system data published by BOJ.

The central bank said no challenges have been raised by financial institutions regarding their migration to ISO 20022 messaging and that, based on the responses to a survey, all JamClear-RTGS participants are preparing to make the transition.

“The adoption to the new standard is primarily driven by a global initiative to standardise payment messaging format to provide better structured end-to-end information carried in payments messages globally; improve analytics, reduce manual intervention as well as ensure a more accurate and efficient compliance process; and make it easier for participants to integrate seamlessly with the payment platforms,” BOJ noted.

“This should improve processing time of payment messages and funds made available to receiving customers,” it said.

huntley.medley@gleanerjm.com