BSP Circular 1223: ISO 20022 Harmonization for Retail Payment Systems

BSP Circular No. 1223 (Series of 2025) requires ISO 20022 harmonization for domestic and cross-border retail payments. It standardizes payment messaging, strengthens interoperability and straight-through processing, and sets governance, reporting, and transition requirements for payment system participants.

Key Changes

New glossary terms added to MORPS: account identifiers, BIC, LEI, straight-through processing, and UETR.
ISO 20022 alignment mandated for retail payments to improve interoperability and efficiency.
Structured data requirements for messaging formats, including sender/recipient details and account identifiers.
Standard identifiers required in the payment chain, including BIC or LEI for cross-border and threshold-based enterprise payments.
End-to-end references required, including UETR for cross-border payment messages.
Complete data preservation across processing, including remittance data or references to separately transmitted remittance information.
Character set and time convention controls aligned with market practice and UTC or local time with UTC offset.
Transparency rules requiring end-user visibility of sender details and transaction reference numbers.
Record retention requirement of at least five years for domestic and international transactions.
Governance and reporting obligations for rulebook maintenance and non-compliance reporting.

Who Is Affected

Payment system participants involved in retail payments, including operators, issuers, and service providers.
Clearing Switch Operators (CSOs) and Automated Clearing House (ACH) participants.
Payment system management bodies (PSMBs) responsible for operational rulebooks.
Entities handling cross-border retail payment messaging.

Effective Date & Transition

The circular takes effect 15 calendar days after publication in the Official Gazette or a newspaper of general circulation. Participants have two years to achieve full compliance through phased implementation, with at least one use case harmonized within the first year. Enforcement actions do not apply during the transitory period.

Compliance Actions Checklist

Adopt ISO 20022 message standards for retail payment use cases in scope.
Update data models to capture structured sender/recipient details, account identifiers, and standardized identifiers.
Enable UETR support for cross-border payment messages.
Preserve complete payment data through processing and ensure remittance data handling is consistent.
Apply market-aligned character sets and use a common time convention across messages.
Use the correct ISO 20022 message type for each business function.
Ensure end-user transparency for sender details, reference numbers, amounts, charges, and currency conversion information.
Maintain transaction records for five years with efficient retrieval and status interpretation.
Implement CSO pre-validation checks and ACH accuracy controls in line with regulatory standards.
Align data handling with consent and privacy rules for any additional customer information.

Governance, Rulebooks, and Reporting

Rulebooks for message specifications, protocols, and exception handling must be developed and maintained by the PSMB.
Annual review of rulebooks is required to align with evolving standards and market practice.
Non-compliance reports must be submitted by the PSMB to BSP, detailing severity, causes, and corrective actions.

Transition Program Highlights

ISO 20022 Harmonization Industry Project Team

Led by the PSMB with ACH participants and CSOs as technical experts.
Membership is subject to BSP approval for inclusive representation.
Responsibilities include implementation plans, timelines, technical requirements, and stakeholder support.

Required BSP reports during transition

Conformance testing results and corrective actions.
Implementation progress and delays.
Operational readiness statistics for live ISO 20022 processing.

FAQs

Does this apply to both domestic and cross-border payments? Yes. The requirements cover domestic and cross-border retail payments.

What does full compliance mean under the transition plan? Full compliance means phasing out message translators/adaptors and achieving ISO 20022 alignment across all in-scope use cases.

Who maintains the messaging rulebooks? The payment system management body (PSMB) is responsible for rulebook development and maintenance, subject to BSP review upon request.