How One Blockchain-based ISO 20022 API Will Revamp the Payments Realm Globally

Leaders of forward-thinking institutions seek to increase efficiency in business transactions and data transfers. Spending days trying to sort out a transaction across various locations due to the inadequacies of limited datasets should become problems of the past.

As such, the global financial industry is already migrating to a common universal messaging language, known as “ISO 20022”, in efforts to replace the complex multi-system payment landscape across different markets.

ISO 20022’s MX messaging format is richer, more granular, and interoperable versus legacy formats in use for several years such as The Society for Worldwide Interbank Funds Transfer’s (SWIFT) Message Text (MT) and the Single Euro Payments Area (SEPA).

While ISO 20022 was introduced by the International Organization for Standardization in 2004 and is currently in use across 70+ countries, the push to adopt ISO 20022 has resurfaced as a key strategy for corporate treasurers and banks considering an impending deadline in November 2025 when the legacy MT would be decommissioned by SWIFT.

Impel's ISO 20022 Application Programming Interface (API) comes at an opportune time to complement the wider adoption of ISO 20022 by offering best-in-class solutions for cross-border and domestic payments with optional instant settlement using digital assets such as Fluent Finance’s US+ Stablecoin.

What are the Objectives of ISO 20022?

ISO 20022 is revolutionizing the financial industry, but its adoption depends on various implementation strategies. Careful consideration of these strategies will strengthen the financial sector’s ability to surpass expectations in fulfilling the below objectives:

• Compliance With Regulations

The standardized format of ISO 20022 will aid banks and corporates in complying with regulations via tools that record and track transaction history. This simplifies cooperation with regulators during audits of processed transactions.

• Improve Resilience

By using more robust datasets, the ISO 20022 standard helps mitigate disruptions and system errors that can occur in manual data processing, which is prone to inaccuracies.

• Enables Straight-Through Processing (STP) for Transactions

The ISO 20022 is compatible with electronic processing throughout the transaction cycle, entirely void of manual intervention. STP increases the processing efficiency and volume throughput of transactions thereby lowering operational costs.

ISO 20022 facilitates customer access to a compatible High-Value Payment System (HVPS) and Real-time Payment System by harmonization, securing data, and reducing the frictions typically seen in traditional banking.

Impel’s ISO 20022 API offers all 733 data definition messaging types, including the older 1,800+ versions for backward compatibility. The robust capacity of the ISO 20022 protocol enhances the overall quality and consistency of data exchanged between parties, particularly in cross-border payments.

Impel's ISO 20022 API, an Excellent Solution for Neobanks, FIs, Corporates, and Traditional Banks

Institutions are gradually adopting the ISO 20022 financial messaging standard for payments to improve and simplify the way information is relayed from one party to another. The standard provides financial institutions (FI)s and corporates with enriched and granular data fields, resulting in clearer and more transparent financial messaging , thereby reducing transaction errors and boosting operational efficiency.

As a fintech innovator for NextGen domestic and cross-border payment solutions, Impel’s solutions are built on the XDC Network's blockchain – an Ethereum Virtual Machine (EVM) compatible Distributed Ledger Technology (DLT) based on proof-of-stake (XDPoS) consensus algorithm, which supports DeFi applications with unmatched speed, security, and scalability.

For organizations in emerging markets across Africa, South Asia, and the Middle East, Impel’s ISO 20022 API offers a cost-effective alternative to traditional providers, making it an inclusive and relevant solution.

Impel’s ISO 20022 API uses XML-based methodology to annotate messages, while traditional providers rely on the older MT format, which is prone to errors and delays in business operations due to the lack of robust data fields for a clear and concise handover.

Designed to complement the existing financial system, Impel’s API delivers enhanced decentralized capabilities that benefit institutions, enabling even corporates to instantly settle transactions through self-custody and payment with digital assets such as a stablecoin.

Impel's ISO 20022 API Solution Includes:

• Standardize Financial Data for Payments

Payments are a major concern for FIs, as financial messages must be seamlessly transferred from one end to another. Impel’s solution helps address this issue by using ISO 20022 as a standardized language for both domestic and cross-border payments, ensuring clear communication and consistent processing.

• Optional Instant Settlement with Digital Assets

No more lengthy delays for completing payment transactions!

Impel's API provides a NextGen instant payment solution that leverages digital assets, such as cryptocurrencies like the XDC Network’s native coin, $XDC, or Fluent Finance’s US+ stablecoin within the payload of financial messages. Additionally, Impel offers an economical alternative to traditional providers like SWIFT or SEPA, resulting in reduced operational expenses.

Benefits of Impel’s API

• Fast and Cost-Efficient Solution

Having Impel built on top of the XDC Network’s blockchain enables seamless processing of payment transactions with a low network gas fee, usually around $0.00001. Transactions can be sent individually or consolidated into a single financial message containing multiple transactions.

• Easy to Implement

Impel provides a highly responsive customer service experience; it is simple to adopt its ISO 20022 API for traditional financial messaging that resembles the current SWIFT standard.

• Secured Data

Impel's ISO 20022 API permits a sophisticated level of security alongside complex transaction data handling. Its solution uses a proprietary Layer 2 security module that ensures financial messages are sent securely, protecting private data and preventing unauthorized access.

Moreover, it’s worth noting that all of the XDC Network’s validating Masternodes are Know Your Customer (KYC) compliant, which is unique and an unprecedented feature, as no other public blockchains currently offer this level of compliance.

Impel’s Recent Strategic Partnership with Fluent Finance

Last year, Impel collaborated with Fluent Finance to introduce Fluent’s federated US+ stablecoin to the XDC Network, forming a strategic partnership that offers a solid and effective instant settlement solution for FIs and corporates.

The revolutionary US+ stablecoin, developed by Fluent Finance, is geared towards on-chain transparency. US+ is a digital asset pegged to fiat currency (USD) backed by a consortium of federated banking partners through a decentralized system that helps banks and institutions run on a low-risk and regulated setting in the financial ecosystem.

Fluent’s US+ stablecoin provides value, trust, and stability to users particularly that the stablecoin is integrated into the core banking systems of the US-based consortium and connected to the XDC Network.

How Impel’s ISO 20022 API Works

The Impel ISO 20022 API solution is optimized for peer-to-peer services using gateway nodes (one for the sender and one for the receiver) and an identity provider called “Keycloak”.

This gateway service sends messages and retrieves information by exposing the API, while the identity provider serves to authenticate and authorize requests made by the API. To ensure security, the platform participant sets up the API client’s credentials creating an access token once the dedicated gateway service is initiated.

The two ways for exchanging financial messages are:

• Postman: This route allows users to access API endpoints easily with a defined set of messages that authenticate requests without requiring an access token.

• Terminal: Financial messages are exchanged on Impel’s platform using curl to call its REST API. However, unlike Postman, users need to obtain an authentication token from the Keycloak service to use this method.

  
  

Check out this overview video on how to get started with Impel’s self-paced ISO 20022 demo.

The demo allows users to create their own financial message, with or without including digital assets in the message’s payload, from a hypothetical remitting bank to a hypothetical recipient bank. These demo transactions are sent in real-time over the XDC Network’s mainnet and recorded on the block explorer. Users can even do a deep dive into the XML code.

Access Impel’s self-paced ISO 20022 API demo here.

Impel provides a sandbox and a pilot program for interested parties to experimentally test its ISO 20022 API for standalone evaluation or using a counterparty to mimic real-world transactions.

Better communication, faster payments, and improved experiences are solid benefits that can be achieved by implementing the ISO 20022 messaging standard, especially with Impel’s NextGen payment rail, which is an innovative software technology for financial messaging to be conveyed from one point to another.

Impel’s decentralized peer-to-peer ISO 20022 API solution for cross-border and domestic payments not only is a cost-effective option but also opens the door for instant settlement to both FIs and corporates, ultimately resulting in an improved experience for all involved.