ISO 20022 Messaging: Purpose Codes joint consultation response of Pay.UK & Bank of England

Pay.UK and the Bank of England have published a joint response to our Standards Consultation on Purpose Codes that concluded earlier this year. The publication summarises the responses received by industry.

What are Purpose Codes and why use them?

Using Purpose Codes when making payments can help participants and their customers identify what a payment is used for. They are one “building block” in our ISO 20022 dataset and will be used for both retail and wholesale payments, forming the basis for many of our NPA Use Cases. This will drive interoperability between ourselves and the Bank as well as for cross-border payments. This is a key milestone regarding the introduction of ISO 20022 and the benefits this seeks to provide: aiding payment prioritisation if required (e.g. welfare or salaries), assisting monitoring and data analytics, and helping decision making around financial crime controls (e.g. APP fraud).

What’s being published?

Following on from our Standards publication last year, we, in collaboration with the Bank of England, consulted industry on which Purpose Codes (from the existing global ISO list) should be used and prioritised for UK payments. Thursday’s publication summarises industry feedback and our next steps. We have received broad support for our proposals and we view this as another successful collaboration between ourselves and the Bank.

What are the Conclusions?

• We will refine the number of Purpose Codes in the UK list to aid implementation
• Our final list includes 6 new Purpose Codes (governed and approved by ISO) – covering “property payments” and “gambling”
• All payments that include any Purpose Code on the global ISO recognised list will still be processed
• The Bank will begin to mandate the use of purpose codes for property and FI-to-FI transactions in CHAPS from spring 2024, with plans to expand these requirements to further transaction types in 2025
• We have focused on “industry outcomes”, citing our end-to-end scenario work which will validate and inform Pay.UK’s implementation choices for Purpose Codes.