A set of proposed harmonization requirements for cross-border payments need to account for the implications and costs to U.S. depository institutions, the American Bankers Association, the Clearing House and the Independent Community Bankers Association said yesterday in a joint letter. The proposed industry standards by a Bank for International Settlements committee seek to promote greater interoperability in payments between entities in different countries. In their letter, the associations said while the proposal is well-suited for wire-based systems, they present challenges for U.S. depository institutions and non-wire payment systems that facilitate cross-border payments.
“To adopt the standards as [the committee] has proposed would require very significant changes to the U.S. payment system, which encompasses multiple payment systems, thousands of depository institutions and numerous technology service providers that enable payments for those depository institutions and their customers,” the groups said.
The associations said the proposed standards would use business identifier codes or legal entity identifiers that are not common among U.S. depository institutions, “nor should they be given that the U.S. payment system uses [routing transit numbers] to identify depository institutions.” The cost of converting U.S. institutions to BICs and LEIs “is too large to be entertained,” and it is not feasible that every institution that wishes to engage in cross-border payments would acquire a BIC or LEI only for that purpose. The proposed standards “would disadvantage U.S. stakeholders, especially community banks, relative to stakeholders in other countries that already employ BICs or LEIs to identify institutions.”
