Why it’s important for debit card issuers to prioritize ISO 20022

Poised as a true game changer for payment card issuers, ISO 20022 could revolutionize how payments are processed and settled.

ISO 20022 is a universal financial industry message scheme with a single standardized approach. It’s designed to get everyone in the financial sector on the same page, providing consistency and streamlining communication—all with the intention of reducing risk.

It's highly anticipated that this new data-rich, open and global standard for all types of payments could jump start the transformation of technology platforms and systems.

That said, here are three compelling reasons why debit card issuers in particular need to seriously consider ISO 20022—now.

Reason 1: Debit card issuers have the most to lose

Debit card issuers already have a lot to contend with. Current accounts form the backbone of a bank’s engagement with its customers, but it’s a relationship that is increasingly being disintermediated by new market players. These challengers are delivering attractive use cases, such as using open banking-oriented platforms to divert previously high-interchange value transactions to alternative payment providers that offer short-term financing buy now pay later (BNPL) schemes to handle the purchase transaction between the customer and retailer. When the issuing bank no longer handles these types of transactions directly, the amount of data available to them is reduced. This results in a lack of visibility into previously available—and valuable—transaction data that’s critical for core operational processes including fraud models, authorizations and customer loyalty programs.

Reason 2: Debit card issuers have a big technological lift ahead of them

It’s imperative that debit card issuers not approach ISO 20022 simply as a compliance burden. To realize the full potential of ISO 20022, issuers will need to pivot away from legacy technology stacks in favor of ISO 20022-native solutions.

To date, adoption has been limited due to the sheer scale of the changes required by all the players in the payment ecosystem. Debit card issuers will have the biggest lift ahead of them in terms of modernizing their technology—especially for those still processing in-house on legacy systems. Issuers looking to upgrade their platforms will also need to consider the benefits of moving to the cloud. According to Forbes¹, “Cloud computing can provide a platform to create APIs that can integrate external systems and share data for better delivery of products and services.”

Debit card issuers that prioritize the adoption of ISO 20022 may be rewarded by business benefits that could be transformative to their operations.

Reason 3: Debit card issuers will benefit from the richer transaction data and drive new revenue

Debit card issuers that tap into the opportunity beyond compliance could be at an advantage with the rich ISO 20022 data flowing through their systems. By tapping into the data available from the standard’s message formats, debit card issuers could gain a better, more comprehensive view of their customers’ behavior.

The richness of ISO 20022 data is key to leveling the competitive playing field crowded by a growing number of fintechs.

Here’s a high-level look at how increased visibility into the purchase data may improve operations: