Limitation in field length of payment messages causes endless number of problems in electronic payments. Let me give a few examples:
- I was unable to fit the payee name MCS MERIDIAN CLIENT ACCOUNT HOUSE RENT 98 MERIDIAN PLACE JUN 2008 in the payee field of my bank's payment screen. My bank told me to change it to
MCS MERIDIAN CLI. I wasn't sure if my payment would reach the landlord. To be on the safe side, I went back to paying rent by cheque. More at
Enhanced Remittance Data Could Multiply Electronic Fund Transfer Volumes.
- Despite paying its bills on time, this company found its broadband connection getting disconnected frequently for non payment of bills. When it investigated the matter it found out that, lacking adequate information in its payment advice - a problem caused
by inadequate field length in its NetBanking screen - the ISP could not apply the payment to its account and tagged it as a defaulter.
- False positive rejections. I requested my customer in the USA to wire transfer his payment to my company, GTM360 MARKETING SOLUTIONS PRIVATE LIMITED. He wasn't able to squeeze that many characters into the payee field of his bank's cross-border
fund transfer software. Thinking that PRIVATE LIMITED was the Indian equivalent of INC, he changed the payee name to GTM360 MARKETING SOLUTIONS INC. The money came to my bank in India, which rejected it because of mismatch in payee name. (#ProTip: It went
through after I had my customer re-initiate the payment with payee name changed to GTM360 MARKETING SOLUTIONS P LTD).
- Additional cost of implementing reconciliation systems. While you can find more details under point #4 ("Extract Additional Revenues From Fixed Price Deals") of my blog post entitled
Indian IT – Turning Crisis Into Opportunity: Part 2, a RECON software uses AI / ML to reconcile payments between different systems in the IT landscape of banks and corporates in order to avoid the problem described at #2 above. (The ISP in
#2 evidently did not have this software.)
Experts proposed ISO 20022 as the panacea for these evils.
ISO 20022 is an XML-based standard that will enable payment messages to accommodate 256 characters, a number that's widely believed to suffice for most domestic and cross-border payments.
I first heard about the standard when a coworker at a software company told me in circa 2004 that ISO20022 was "a year away" and requested for the budget to urgently rewrite our product to fit the new standard. I didn't take this timeline at face value and
vetoed this project.
Thank goodness - it's 2023 and ISO 20022 has still not happened.
ISO 20022 is a canonical example of what I call Waiting for Godot Moment.
Let me borrow the following passage used by TowerGroup to illustrate this phenomenon:
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In Samuel Beckett's play Waiting for Godot, the main characters, Estragon and Vladimir, wait expectantly, yet unsuccessfully,
for a person named Godot to arrive. Although both men claim to know Godot, they admit that they would not recognize him if they saw him. Further, when discussing Godot and what he can do for the men, Vladimir states, "Oh ... nothing very definite." As the
play progresses, the men discuss a variety of actions they can take to pass the time until Godot arrives. Unable to decide on a course of action, they ultimately choose to do nothing because "It's safer," so they continue to wait, presumably indefinitely.
- "Waiting for the Payments Hub: A Play in Three Acts" by Andy Schmidt, Research Director Global Payments, TowerGroup.
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While TowerGroup had used the Godot metaphor for global payments hub technology, it's equally suitable for ISO 20022.
Going by recent news, the Waiting for Godot moment in ISO 20022 has gone up by a few notches:
- Fed decides to delay implementation of ISO 20022 by two years to 2025 to avoid conflict with FedNow rollout -
Finextra
- We can add another 6 months to that: TARGET2 migration has been delayed again -
Bob Lyddon - Lyddon Consulting Services via Finextra
I can't think of another technology that has managed to stay in the limelight for so long despite being delayed by nearly 20 years. (Global payments hub, the original target of the Waiting for Godot jibe, has either happened or fallen out of limelight.)