Banking Sector – End-to-End EDI Flow Using ISO 20022

 Here's a complete and detailed end-to-end EDI flow in the Banking Sector using ISO 20022, covering all key message types (transactions) involved in payments, statements, reconciliations, and acknowledgments.

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🧾 Banking Sector – End-to-End EDI Flow Using ISO 20022

🔰 Overview:

• ISO 20022 enables electronic financial communication using XML-based messages.

• It replaces legacy formats (e.g., SWIFT MT, X12 EDI) with a unified, richer standard.

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🏦 Actors in the Banking EDI Ecosystem:

Role	Description
Corporate/ERP	Initiates payments or receives reports
Bank (Bank A / Bank B)	Processes, routes, and confirms transactions
Clearing System (e.g., SWIFT, SEPA, RTGS)	Settles interbank payments
EDI Translator / Middleware	Converts ERP output to ISO 20022
Regulatory Body	Receives regulatory reports (if applicable)

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🔁 End-to-End ISO 20022 Transaction Flow

#	Stage	ISO 20022 Message	Description
1	Initiation	pain.001	Customer Credit Transfer Initiation (e.g., payroll, vendor payment)
2	Acknowledgment	pain.002	Payment Status Report (acceptance, rejection, processing status)
3	Funds Transfer	pacs.008	FI to FI Customer Credit Transfer (actual interbank payment)
4	Settlement	pacs.004	Payment Return (e.g., rejected or returned payments)
5	Direct Debit Initiation	pain.008	Customer Direct Debit Initiation (e.g., utility bill collection)
6	Direct Debit Settlement	pacs.003	FI to FI Direct Debit (interbank pull transfer)
7	Bank Statement (End of Day)	camt.053	Bank to Customer Statement (detailed daily transactions)
8	Bank Notification (Real-time)	camt.054	Debit/Credit Notification (posted transactions)
9	Bank Account Report (Intraday)	camt.052	Account Report (intraday balances and transactions)
10	Account Balance Inquiry	camt.060	GetAccount
11	Mandate Management	pain.009, pain.010	SEPA Direct Debit Mandate management
12	Check Management	cain.001, cain.002	Check deposit/clearance info (used in some countries)
13	Currency Exchange	fxtr.001	Foreign Exchange Trade Confirmation
14	Loan/Interest Management	tsin.001	Trade Settlement Instruction
15	Regulatory Reporting	reda.001, reda.002	Regulatory/Tax Reporting

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🧩 Flowchart: End-to-End ISO 20022 EDI Payment Flow

[Corporate ERP]
   ↓ generate payment file
[EDI/ISO 20022 Translator]
   ↓ pain.001 (Credit Transfer Initiation)
[Bank A (Corporate Bank)]
   ↓ pain.002 (Status Report)
   ↓ pacs.008 (FI to FI Transfer)
[Clearing System/SWIFT/SEPA]
   ↓ pacs.008 to Bank B
[Bank B (Beneficiary Bank)]
   ↓ pacs.002 (Interbank Status)
   ↓ camt.054 (Credit Notification to Beneficiary)
[Bank A]
   ↓ camt.054 (Debit Notification to Corporate)
   ↓ camt.053 (End-of-day Account Statement)

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🔐 Security & Transport

Element	Standards
Transport	AS2, SFTP, API, SWIFTNet
Security	TLS, PGP, Digital Signatures
Compliance	PCI-DSS, GDPR, FATF, local banking rules

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✅ Real-World Use Case (Vendor Payment)

Step	Message	Description
1	pain.001	Corporate sends vendor payment
2	pain.002	Bank responds with status
3	pacs.008	Bank sends funds to supplier's bank
4	pacs.002	Beneficiary bank confirms receipt
5	camt.054	Notification of debit/credit
6	camt.053	Statement sent to corporate ERP for reconciliation

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📦 ISO 20022 Message Grouping

Domain	Message Group	Description
Payments	pain, pacs	Initiation and interbank transfer
Cash Management	camt	Account statements, balance reports
Trade Finance	tsin, reda	Settlement, regulatory, tax
FX	fxtr	Currency exchange
Cards/ATM	cain	ATM/check/card instructions

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🔄 Mapping Legacy EDI to ISO 20022

Legacy EDI (X12 / EDIFACT)	ISO 20022 Equivalent	Description
EDI 820	pain.001	Payment Order
EDI 823	camt.054	Payment Advice
EDI 822	camt.053	Bank Statement
SWIFT MT103	pacs.008	Customer Transfer
SWIFT MT940	camt.053	Bank Statement

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