SWIFT MT (Message Type) and MX (Message Exchange - ISO20022 standard) are two different messaging standards used by SWIFT for cross-border payments and financial transactions. MT is an older standard that has been in use for several decades, while MX is a newer standard that was introduced in 2007.

For several decades correspondent banking has used the MT messaging framework for facilitating cross-border payments, their confirmations and account statements across the globe. With SWIFT GPI the system has also become transparent and fast. 

But unfortunately, MT messages are constrained by unstructured, incomplete and inconsistent data. This poor-quality data jeopardizes the STP processing and result in manual repairs and consequently delayed processing. This warranted the next stage of transformation to deliver better-quality to improve the efficiency, speed and compliance of payments, enabling better customer experience and opportunities for new client services.

Hence the financial community has decided to move from SWIFT MT to ISO 20022 based MX messages. 

ISO 20022 messages can contain more and richer data than their MT equivalent. This richer data will meet some long-term demand from customers (who want more remittance information carried with the payment instruction), regulators and risk managers (who want better assurance that screening and testing measures are effective) and business managers (who want to be able to mine databases of payments for insights into customer preferences).

Salient benefits of adapting MX over MT are:

Improved operational efficiency: ISO 20022 messages will lead to higher end-to-end STP rates, with fewer false positives arising from poor-quality risk-bearing information in payments-related exchanges

Enhanced Message Validation: MX messages include built-in validation checks, which can help identify errors and discrepancies in payment data before messages are sent.

Greater Message Capacity:MX messages can accommodate larger amounts of data than MT messages, which can improve the speed and efficiency of message processing.

CBPR+ migration - Timeline:

Phase 1, till November 2022: MT remained the only standard for cross-border payments.

Phase 2, from November 2022 to November 2025: SWIFT transaction management services are introduced,

1. CBPR+ dataset for ISO 20022-based payments and reporting over APIs and messaging; 

2. Coexistence with financial institutions that choose to stay on MT. The platform will mediate between counterparties using different protocols and formats as necessary, based on mutually agreed business relationships. ISO 20022 adopters do not need to wait for their counterparts to be ready; 

3. Financial institutions that continue to use the MT format up to November 2025

Phase 3, November 2025 onwards:

1. MT 1, 2 and 9 series messages are decommissioned for correspondent banking;

2. All interactions with the SWIFT platform, whether API or messaging, use CBPR+ ISO 20022 dataset. 

The scope of CBPR+ messages will be increasing during co-existence, with cheques and direct debits starting in November 2023. The migration from MT to MX is a significant undertaking for financial institutions and requires careful planning and coordination. 

Some of the key challenges associated with the migration include:

System Compatibility: Financial institutions must ensure that their messaging systems are compatible with the new MX standard and can handle the increased data volumes and complexity.

Business Process Changes: The migration to MX may require changes to existing business processes and workflows, which can be disruptive and time-consuming.

Training and Education: Financial institution staff may require training and education to understand the new MX standard and how to use it effectively.

Migration Costs: The migration to MX can be costly, requiring significant investments in new technology, system upgrades, and staff training.

Despite these challenges, the migration from MT to MX is necessary to ensure that financial institutions can continue to provide efficient and effective cross-border payment services in the increasingly complex and dynamic global financial landscape

CBPR+ migration - Coexistence:

MT-MX migration coexistence is the process of enabling both MT (Message Type) and MX (ISO 20022 message format) messaging formats to coexist in the system during the migration process. This coexistence period can be critical in ensuring a smooth transition to the new messaging format, as it allows for a gradual migration rather than a sudden cut-over that could disrupt operations.

In-flow Translation service: In-flow translation is a point-to-point service where SWIFT centrally translates MX format to MT format and sends both the messages to the receiving institution. This approach aims to facilitate the integration in the receiver's application environment in cases where not all applications can (yet) support the ISO 20022 MX format.

In-flow Translation service provides a longer migration window for the FIs to adopt to MX messages. Also, In-flow translations services may become paid services in later stages of coexistence.

Beyond coexistence period the In-flow translations services will not be available from SWIFT. However, institutes that do not want to migrate their core/payment systems to adopt to MX messages may still use an on-premise translation service that translates the outgoing messages to MX format and incoming MX messages to MT format.