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What’s the difference between MT and MX messages?

ISO 15022 was the MT message subset, based off the FIN protocol, organized by “MT” followed by a three-digit numeric ID that indicated the message category, group, and type. For example, a single-customer credit transfer is the classic MT103.

ISO 20022 is known as MX, an XML-based iteration that promises easier if not seamless integration into STP systems. The MX message is composed of four parts, with four letters indicating the message type, three alphanumeric characters for the message number, three numbers highlighting the message variant, and finally two characters for the version number. That same single-customer credit transfer will now be known as the pacs.008.001.0x in MX format.

Both are SWIFT standards. Both are messaging systems. However, the MX standard has a whopping 940 fields to the relative handful that the MT standard allows. As most systems still run off the MT standard (MX was introduced in the early 2000s) they may have to update to the newer, more data-rich MX format to be complaint with ISO 20022 standards.

Why the change?

The MT standard, while fair for its day in 1977, has failed to evolve with the changing needs of the payments sphere, and a system upgrade is needed. It limited characters to 144, making it difficult to send the larger amounts of information often necessary in payments, while the MX standard offers a much greater degree of freedom with a more generous character limit and character pool, as MT was never designed to use most characters due to the limited nature of computers at the time of introduction. Also, the STP features will grease the wheels for internal reconciliation, invoice management, liquidity management, and numerous other functions that previously could require manual processing or systems interface adaptation.

When do I need to change?

The US Federal Reserve switched over in November 2023, but the old MT format will be honored until 2025, when it will be finally sunset and MX will be the global standard. There’s some time to get systems in order, but it’s never too soon to take advantage of the new opportunities the ISO 20022 standard will provide.

What challenges will the transition face?

Until everyone gets on the same systemic page, sending MX messages to an MT may result in some confusion, but SWIFT’s transaction manager is already capturing all the data received in the ISO 20022 format.

Areas of Impact from an ISO Assessment:
Compliance improvement in ISO standards (e.g., ISO 9001, ISO 14001)
Enhanced operational efficiency and process optimization
Reduction in operational risks and errors
Improved product/service quality and customer satisfaction
Strengthened information security and data protection
Potential cost savings from streamlined processes
Supply chain and vendor management improvements
Enhanced customer trust and brand reputation

Rich Data and the ROI
Potential revenue growth through increased customer trust and new market opportunities
Cost reduction through streamlined processes and reduced errors
Improved supplier and partner relationships, leading to better terms and collaborations
Enhanced brand reputation and trust, potentially increasing customer loyalty
Opportunities for international expansion and market access

What do I need to upgrade?

Payment platforms may need to be upgraded, as the MT standard is a flat-file and MX is not. MX involves hierarchy between the fields, meaning the platforms will have to accommodate.

Nuances present in an ISO Framework Approach:
Specific ISO standard(s) targeted (e.g., ISO 27001 for information security)
Scope and scale of the ISO implementation (enterprise-wide or department-specific)
Timeline and milestones for ISO certification
Required resources and budget allocation
Training and awareness programs for employees
Internal auditing and corrective action plans
Integration of ISO requirements into existing systems and processes 

Advantages of SWIFT MX Driven by ISO 20022 Standard
Utilization of XML Format: Simplifies Straight-Through Processing (STP) within IT systems
Multilingual Capability: Accommodates non-Latin alphabets, promoting inclusivity.
Data-Enriched Messages: Empowers advanced data analysis and reconciliation efforts.
Compliance with Regulations: Streamlines regulatory reporting, aids in Anti-Money Laundering (AML) and sanctions checks.
Enhanced Customer Service: Enhances overall customer experiences.
Improved Reconciliation: Promotes automated reconciliation between invoices and payments.

In summation, the transition from MT to MX messages is a significant step toward modernizing payment systems, offering numerous advantages such as streamlined processes, improved data handling, and enhanced customer experiences. Embracing ISO 20022 standards is not just about compliance but also about unlocking new possibilities in the ever-evolving world of financial transactions.

For more information or consultation on ISO 20022, or questions related to the world of payments, please reach out to our Director of Operations, Daniel Saleh, at [email protected]