EPC and ISO 20022: regulatory changes to consider

The European Payments Council (EPC) is an organization dedicated to developing efficient and harmonized payment solutions across Europe.

The EPC establishes rules and standards for euro payments, particularly for SEPA credit transfers and direct debits, to accomplish this goal. The EPC collaborates closely with key stakeholders, including major banks, European institutions, and regulators, to ensure interoperability and the continuous evolution of European payment systems.

The EPC has aligned itself with the ISO 20022 standard to streamline SEPA exchanges. The European Payments Council has adopted and adapted this standard so that all European banks and payment systems can exchange data using a common language.

This article provides key insights into the ISO 20022 standard, its impact, and the upcoming regulatory deadlines that businesses and financial institutions must prepare for.

What is ISO 20022 ?

ISO 20022 is a globally recognized standard for structuring financial messages, including payments, statements, transaction confirmations, etc. This standard defines a unified framework for creating, modifying, and transmitting financial data, ultimately improving efficiency and communication on an international level.

By providing a universal standard, ISO 20022 enhances fraud prevention and money laundering detection, facilitates smoother transactions, and fosters innovation in banking.

The EPC has incorporated ISO 20022 as a foundation for its technical specifications to guarantee the interoperability of payment systems within Europe. Any business or financial institution involved in SEPA payment message exchanges must strictly comply with EPC requirements. Failure to fill in a mandatory field results in message rejection, potentially disrupting transactions.

For companies, adopting ISO 20022 brings several advantages:

• Easier transactions due to harmonized payment processes and improved interoperability.
• Automated payment processing, leading to more reliable, efficient, and cost-effective operations. The structured format ensures that payment systems interpret messages accurately, minimizing human intervention.
• Enhanced reconciliation with more structured and precise financial data.
• Increased security and regulatory compliance, reducing risks associated with financial fraud and cyber threats.
• Greater transparency and visibility, with precise transaction tracking, ultimately strengthening customer trust and satisfaction.

Regulatory Deadlines and Changes

A revised version of ISO 20022 was introduced in 2019, initially scheduled for enforcement in November 2023. However, due to delays in bank preparation, implementation took place in March 2024.

One of the most significant updates involves the introduction of structured addresses. Previously, address information was grouped under a single field. The new approach separates it into distinct elements: street number, street name, city, and country. This change enhances data clarity, strengthens compliance with regulatory requirements, and improves filtering capabilities.

Banks must update their processes to support structured transaction address formats to facilitate this transition. Financial institutions have until November 2025 to fully implement this new standard. Starting in 2024, all banks must exchange structured addresses, making early compliance crucial. To ensure compliance and maintain transaction security, financial institutions must stay vigilant to regulatory developments and continuously adapt.

Ensuring Compliance and Seamless Migration

To stay compliant and secure financial transactions, financial institutions must remain proactive in monitoring regulatory changes and adapting accordingly. Recognizing the importance of compliance, Skaleet has already completed the EPC 2019 migration for its clients, ensuring their adherence to the latest regulatory requirements.

Since November 2023, Skaleet has successfully facilitated this transition. Being prepared in advance was critical—any failure on D-Day (17 and 18 March 2024) would have prevented banks from sending or receiving payments and direct debits for their customers.

Moreover, Skaleet’s Core Banking Solution includes comprehensive, structured address management, ensuring that financial institutions seamlessly meet the November 2025 deadline set by the EPC. Skaleet facilitates a smooth and cost-efficient migration to the new standards without operational disruptions by integrating structured addresses early.

Want to Learn More?

If you’re looking for a core banking solution that ensures compliance with ISO 20022 and EPC regulations, contact our team today for more information.