In 2022, the Fed announced that the Federal Reserve Banks planned to adopt the ISO 20022 standard for the Fedwire Funds Service in a single-day implementation strategy on March 10, 2025. ISO 20022 is a globally accepted messaging standardization approach introduced in 2005 by the International Organization for Standardization with the goal of using the same language for all financial communications. The Fedwire migration marks a significant turning point in the modernization of the American payment system that complies with best practices and international standards.
Here are three key updates you need to know about the upcoming migration schedule/planned timeline.
Compliance Window:
At the end of October 2024, the compliance testing window will officially close. Any financial institution that wants to remain in compliance with ISO20022 needs to complete its testing with the Federal Reserve by that time.
Post-Launch Integration
Compliance testing will resume two weeks following the launch (around late March).
Managing Non-Approvals
Organizations may choose to keep using the current method without paying penalties if they have not achieved compliance by the testing deadline. It’s crucial to remember that ongoing use of Fedwire Direct requires compliance with ISO standards if a third-party solution is used for data loading. Therefore, financial institutions might not be able to use the solutions that are already available if these standards are not adopted and will be forced to manually load their wire transactions to the Fedwire Direct portal.
In partnership with the Federal Reserve, Alacriti has been proactive about ISO 20022. Alacriti’s solutions have all APIs built to the ISO 20022 standard, which is imperative for the RTP® network and the FedNow® Service, and also to accommodate the implementation that Fedwire has planned for 2025.
Read more about ISO 20022 in ISO 20022: Why After Almost 2 Decades It’s More Important than Ever.
