paymentsmessaging

Payments messaging refers to the transmission of standardized data between payers, payees, banks, and payment networks to effect transfers. It covers initiation, authorization, clearing, settlement, and notification. It relies on interoperable formats to enable cross-border and domestic payments and supports both consumer and merchant transactions.

The two broad families of standards are ISO 20022 and ISO 8583. ISO 20022 provides XML or JSON-based messages used in modern real-time and batch payments; examples include pacs.001 and pacs.008 for credit transfers, pain.001 for payment initiation, and camt.052/053/054 for statements. ISO 8583 underlies card payments in many networks and uses MTI-based messages. SWIFT has historically carried MT messages and is shifting toward ISO 20022 MX messages.

Message flows typically begin with payment initiation by a customer or merchant, followed by authorization by the issuer, then clearing and settlement through the payment network or central bank. The involved parties include issuer, acquirer, merchant, processor, and correspondent banks. Cross-border transfers involve multiple intermediaries with standardized interbank messaging.

Security and regulation include encryption, PKI, and tokenization to protect data in transit and at rest, plus compliance with PCI DSS for card data, PSD2 or regional equivalents, strong customer authentication, and privacy laws. Trends include real-time payments, open banking, API-based payment initiation, and broader adoption of ISO 20022 messaging.