Sibos 2024: A lack of payment interoperability is hurting businesses; here’s how to fix that

Few household items exemplify global commerce like the smartphone.

To achieve seamless payment interoperability, the industry needs a multi-pronged approach

If you were to order one of the latest models and take it apart (I don’t recommend you actually do this), you’ll find semiconductors, rare earth elements, glass, and more, sourced from all corners of the globe. That’s before you factor in wherever the device was actually designed, and how it was delivered to your front door.

At face value, this suggests that moving “stuff” – whether goods, finance, or people – internationally is easier than ever.

But the apparent ease with which the world’s biggest consumer technology firms are able to ship high-end products around the world belies a much more complex global trading environment. And it’s growing more complex every day.

According to a recent report published by Thunes in collaboration with Visa, nearly 40% of companies say they’ve lost business due to cross-border payment issues.

A lack of payment system interoperability, which refers to the communication, information exchange, and value transfer between different payment systems, is a major blocker to global business expansion.

The barriers to this integration are manifold, including security concerns, payment tracking issues, and processing speeds. The ease of issuing payments also varies across different endpoints: bank accounts, global cards such as Visa, or e-wallets such as PayPal, all have different requirements.

So, what’s the solution?

Achieving payment interoperability is a complex task, given the intricate nature of payment systems, each tailored to specific locations and laden with diverse technology, regulations and operations.

The good news is we’re getting closer to having the technology we need to do it.

Application programming interfaces (API), which offer a way for two or more programmes to communicate with each other, as well as artificial intelligence (AI) and machine learning (ML) can all play their part.

AI and ML, for example, can improve payment processes, fraud detection, risk management and customer support, reducing the level of manual input required to move money between different payment systems.

Also, payment infrastructure firms like Thunes are building global networks with local compliance, to make cross-border transactions more efficient and interoperable.

Of course, the journey towards payment interoperability does not reside solely within the remit of fintech. Governments, banks, tech companies, and regulators need to work collaboratively to harmonise payment standards. These standards form the bulwark against the creation of “walled gardens” or distinct ecosystems, fostering a more interoperable world.

To achieve seamless payment interoperability, the industry needs a multi-pronged approach, including technology innovation, harmonised standards, and collaboration among key stakeholders. As the demand for seamless cross-border payments continues to rise, the journey towards achieving this goal is complex but imperative for our increasingly globalised world.

Sponsored by Visa