UBL and ISO20022 are Complementary

Lichen employs UBL to structure information from payers and payees, in order to set up a payment event. It also meets their information requirements following a payment event.

But Lichen and UBL are not involved in the multi-stage payment event itself.

Payment involves ISO 20022 (Universal financial industry message scheme) and its related financial industry solutions and standards. (Note: Whereas ISO/IEC 19845 is generally referred to by the acronym UBL, the acronym UNIFI is not used for ISO 20022.)

The outer threshold of UBL in the domain of payments occurs precisely where an invoice — possibly based on a purchase order (or sales order) — structures and presents for precise retrieval all the information required to activate a payment; that is to say, it sets up but does not perform the re-location of the specified financial amount from one account to another. And, ISO 20022 specifies the method by which that information is conveyed to the accounts and to the payments system beyond to actually carry out the re-location of financial value amount from one account to another.

A pragmatic way to think about these complementary standards would be in terms of who they are used by: UBL (ISO/IEC 19845) structures information exchanged between buyers and sellers; ISO 20022 structures information exchanged amongst financial entities. Members of both these standards’ Technical Committees share a general consensus that the ‘upstream’ processes which prime a payment are well-defined by UBL, while the ‘downstream’ processes that perform the payment are well-defined by ISO 20022. The final upstream node, ahead of transaction execution, is the invoice that ‘speaks’ UBL to businesses. The first downstream node in transaction execution is the account that ‘speaks’ ISO 20022 to financial entities. Since ISO 20022 messages originate from UBL invoices, the package of information that arcs from the upstream node to the downstream node needs to meet all the requirements defined by those downstream processes. Therefore prior to transaction execution, these components within UBL should be thought of in future tense, as Currency (to be used), Payment (to be dispatched), and Tax (to be dispatched). But as soon as a transaction is being executed these components occur in the present or past tense, as Currency (that is/was in use), Payment (that is/was dispatched), and Tax (that is/was dispatched).

UBL and ISO 20022 differ in terms of intended data persistence. UBL documents are intended to have permanence as evidentiary artifacts of agreement amongst parties. ISO 20022 standardizes only a message scheme without specifying the various message types, because ISO 20022 messages are transitory and they evolve with the diversity of payment systems in operation. For convenience, the ISO 20022 community maintains a catalogue of message types structured according to the ISO 20022 standard. But unlike UBL, this ISO 20022 catalogue is not intrinsic to the standard.

Both UBL and ISO 20022 evolve within a much wider set of other complementary standards. For example, the OASIS Technical Committee for UBL works closely with an OASIS Technical Committee called TaxXML, to ensure that UBL can accommodate the information requirements of a variety of tax regimes. That group is comprised mainly of governmental representatives working with the OECD. UBL currently supports tax rules associated with attributes of the parties, attributes of the items traded, and/or attributes of the transaction.


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