WIRE REMITTANCES WILL BE ABLE TO CARRY LOTS MORE DATA LATER THIS
YEAR, BUT IT’S NOT CLEAR WHETHER BANKS ARE ONBOARD.
Wires Get Smarter
FOR DECADES, wire transfers have been the quickest, most reliable, most expensive
and dumbest way to make payments. Using wires isn’t dumb. It’s the wires themselves
that are, with their tiny data fields and inability to convey more than bare-bones infor-
mation about payments. “We get high-value wires to settle multiple invoices,” reports
Christy Barwick, a Microsoft senior manager in corporate finance, “but the informa-
tion we need to auto-post or apply the cash is not there. Even when the payer sends
mated straight through.”
There is also an unstructured
option, in which the sender can
populate a block with data. With
proper coding, the wire can pass
along 820 or XML data, Isaacson
says. Or the wire can provide
a URL and reference number
that take the receiver to another
site where remittance data are
stored, he explains.
The infrastructure can trans-
port data in a variety of formats,
including EDI 820, Edifact, STP
820, XML and ISO 2022, says
Ray Mulhern, senior vice presi-
dent for product management
and strategy at The Clearing
House, which operates Chips.
One sticking point is SWIFT:
its MT103 messages can carry
9,000 characters, but they are
only available to a closed user
group, Mulhern reports. “SWIFT
members in the U.S. tried to
get it opened up as a general
message, but the internationals
didn’t buy it yet,” he says.
Persuading foreign banks is
far from the only hurdle. “A lot
of heavy lifting remains to be
done, especially by vendors and
banks,” Mulhern notes. Corpo-
it, it gets cut off by the short
data field.
“It means a lot of manual
work for cash application,” Bar-
wick says. “We’d love to see a
solution that delivers full remit-
tance detail in structured fields
so that the process can be auto-
That solution is coming. The
two wire clearing networks,
Fed Wire and Chips, now have
the rails to carry the freight of
full remittance detail. Starting
in November, banks will be
required to show that they are
able to receive the full remit-
tance detail that arrives with
wires. Now it’s up to banks and
corporations to load and unload
the freight.
Wires currently have one field
that can hold up to 140 characters
of information. The new format
has multiple fields and a capacity
of 9,000 characters, explains Ken
Isaacson, a vice president and
project manager for wire remit-
tance data at the Federal Reserve
Bank of New York.
“There are three ways to link
wires to remittance information,”
Isaacson explains. “Structured
fields can be populated within
the wire. The new formats are
field-to-field compatible with
the 820 and ISO 20022 data
Illustration by Dave Ember
A lot of heavy lifting
remains to be done,
especially by vendors
and banks.
—tHe cLearinG HOuse’s
muLHern
