TL;DR Breakdown
- The Federal Reserve has now planned to adopt the ISO 20022 format for payments.
- This model is identical to the payment format used by Ripple Labs.
- The Fed banks will integrate the ISO 20022 format with the Fedwire Funds Service or the FFS.
In an intriguing announcement on Monday, the United States Federal Reserve confirmed the adoption of the ISO 2002 payment format. It was also cleared that also the Federal banks will implement this format for all the Fedwire Fund Services or FFS transactions.
The interesting fact to notice here was that Ripple already follows this payment format, i.e., the ISO 2002 format. This proves that Ripple had implemented this new tech quite early.
What is the ISO 20022 format used by Ripple?
The ISO 20022 format will be integrated into the payment system of all the Federal banks. It was created by the ISO Technical Committee TC68 Financial Services, wherein a new form of messaging was introduced. In an effort to make real-time payments more efficient and easier, this payment format can be easily used for cross-border payments as well.
This format also protects the banks and the users from money laundering activities by strengthening their security in the payment system. Normally, this format is integrated into a payment system through three stages but the Federal Boards asked the banks to implement this format in one day.
FFS and Ripple will now operate under the same format
The Fedwire Fund Services will now be operating under the same format as Ripple. This makes an interesting scenario for the two payment giants. The FFS is responsible for settling real-time payments that the institutions or individuals make. Hence, the FFS allows these groups to make faster and quicker payments.
A year ago, on 1st October, Ripple Labs announced the integration of the new payment format and that now, it was ready for the year 2030 as well. This bold remark was made by Asheesh Birla, who is the Senior VP of Product at Ripple Labs.
