Hot Topics
by Kas Stewart, SVP & AAP
ISO20022
It is difficult for me after these many months of including ISO2022 as a hot topic to continue to think that it is hot, but it is! I open every article with more information about ISO20022, and this article is no different. Although the targeted implementation day of March 10, 2025, has been postponed until July 14, 2025, the transition to ISO20022 continues to move forward. We are restricted from sharing the actual format with you, but The Quick Reference Document from the Federal Reserve provides a look at some of the changes in format and terminology that you will be seeing.
The Bankers Bank continues to prepare, test and be ready for this notable change for you and your customers. Readiness extends beyond the wire format and includes readiness of internal and external systems that support wire transfers, upstream and downstream and client facing systems that support wire transfer operations. We have previously discussed recurring wires and your ability to copy old wires. All wires are maintained on our system for 10 years for your reference, but you will not be able to copy those old wires as they are in the old format. Every payment made from July 14 and going forward will be a new payment.
The existing wire system will have an orderly close on the implementation date, at 7 PM, EST. Your staff should make certain that all incoming and outgoing wires have been processed and that there are no wires “pending” prior to that close.
This new format will be faster, more efficient and will standardize the US with other global payment systems.
The Treasury Department will only accept ISO20022 structured data starting July 14, 2025. Please call us if you have questions or concerns.
FASTER PAYMENTS
FedNow, the first new payment rail in 50 years, is growing. This product was launched in July 2023 with thirty-five participants and has now grown to more than 1,000. Many participants are currently only receiving entries. Financial institutions are being encouraged to be innovators, increase your return on investment, provide more and better customer service and garner some revenue. The system is very efficient and automated, which ends the need for staff to be on the clock and all you need to do for those benefits is enable the send side of FedNow.
If you are considering FedNow or the send capability in FedNow, begin to target users, be selective as not all customers will have a need. Look for minimal risk opportunities like your own loan disbursements, or your vendors, real estate transactions, or insurance claim distributions. Fed continues to waive their monthly fee of $25; transaction fees are $.045; and a request for payment is $.01. Please call us if we can answer other questions or can help you in any way.
CHANGES TO POSTAL MONEY ORDER
The U.S. Postal Service is redesigning money orders and enhancing security features. Ink on the new money orders is red and blue with an American flag and an eagle head. There will be a watermark that is only visible when held up to the light, a vertical security thread only visible when held up to the light and a QR code that is directed to the USPS website. The USPS is not revealing all security marks, but money orders are among the most secure instruments in the world. The USPS routing number will be changed to 0000-0119-3. Be sure your system will be able to process the updated routing number. This design will be available to the public in early 2025.
SAVINGS BONDS
Financial institutions now have the option to not cash savings bonds for both non or new customers. Bonds can be cashed for established customers (12 months). Customers can also be referred to Treasurydirect.org for both purchase and redemption of bonds.