In an era when payment ecosystems are fragmenting and often siloed, interoperability promises to connect diverse systems to ensure that cross-border payments are seamlessly transacted.
Now, the dynamic, quickly changing payments world is making progress to allow disparate platforms and currencies (both fiat and digital) to integrate and communicate. Blockchain and other fintech are solving interoperability challenges in those siloed finance infrastructures, but challenges remain before these systems will truly work together effortlessly.
What is interoperability in financial services
In general, interoperability is the ability to connect and work seamlessly outside of one’s own network with another system.
“Data interoperability refers to the ability of different systems, applications, and processes to exchange and use data seamlessly and transparently,” according to Moody’s. “Interoperability ensures that data can be shared between companies, systems, and platforms without any loss of information or degradation of quality.”
In financial services, interoperability plays a key role in helping businesses safely and securely connect. It allows different systems to read and manipulate data seamlessly, improving decision-making and efficiency.
The importance of interoperability in the financial system
Interoperability is crucial in the financial system, enabling seamless communication and data exchange between different systems, institutions and countries. In the financial sector, interoperability facilitates the exchange of financial information, such as transaction data, account information and payment instructions between banks, financial institutions and other stakeholders. This enables efficient and secure processing of financial transactions, reduces errors and costs and improves customer experience.
Implementing a practice that ensures the accuracy of payment data can enhance the reliability and compliance of cross-border payments amid numerous global payment rules.
Interoperability in the financial system also enables the integration of different payment systems, such as credit card networks, online payment platforms and mobile payment systems, allowing for a wider range of payment options and greater convenience for consumers. Furthermore, interoperability facilitates the sharing of financial data and information between institutions, enabling better risk management, compliance and regulatory oversight.
Financial infrastructure today
Financial services is a complex industry with a patchwork of new and legacy technology. The platforms, software and access to these systems aren’t uniform throughout the sector — sometimes they aren’t even uniform within the same organization. All the while, the global industry is a web of traditional commercial and investment banks, insurance companies, payments companies and fintech firms, plus blockchain and others.
Interoperability is meant to help businesses, institutions and others navigate this intricate web as they seek to communicate and transact across multiple platforms.

The current state of cross-border payments
Cross-border payments are a crucial aspect of international trade and commerce. However, the current state of cross-border payments is plagued by inefficiencies, high costs and slow processing times.
According to a 2024 World Bank study, the average cost of cross-border payments is around 6.3% of the total transaction value, with some transactions taking up to five days to settle. This is largely due to the lack of standardization and interoperability between different payment systems, leading to a complex and fragmented landscape.

Global B2B payments and interoperability
As if the technological challenges weren’t enough, there are also legal, regulatory and political considerations for business-to-business (B2B) cross-border payments. A more comprehensive framework — based on the principles of interoperability — is needed to streamline the processes, especially considering that many possible solutions have created an increasingly fragmented marketplace.
Too often, innovations and nascent technologies solve a part of the puzzle, but they don’t play well when integrating with other systems. These factors can make cross-border payments a frustratingly slow and expensive endeavor.
Businesses can save money by using cross-border payment methods that avoid traditional banking systems, leading to significant discounts and reduced transaction costs.
Interoperability is essential for efficient and secure cross-border payments. By enabling the seamless exchange of payment information and instructions between different systems and institutions, interoperability facilitates faster and more reliable cross-border transactions. This reduces the risk of errors, delays and costs associated with manual processing and lets businesses and individuals make international payments with greater confidence.
Interoperability in cross-border payments also enables standardized payment formats and protocols, such as SWIFT and ISO 20022, that facilitate the exchange of payment information between different systems and institutions. This provides greater efficiency, security and transparency in cross-border payments, reducing the risk of errors and fraud.
Benefits of interoperability
Interoperability is essential for creating a seamless and efficient cross-border payment experience. By enabling different systems to communicate and exchange data in a standardized way, interoperability can help reduce costs, increase speed and improve the overall user experience.
In cross-border payments, interoperability can facilitate the exchange of payment data between different systems, reducing the need for manual intervention and minimizing the risk of errors.
Decentralized finance vs. traditional finance
As cross-border payments and international transfers have become more commonplace and an integral part of the global economy, traditional financial models and practices often increase the costs of transactions while slowing their speed due to myriad challenges.
Many legacy systems have been built up in a siloed world with little thought, planning or ease of execution to communicate with other platforms. These proprietary systems often lack standardization, require intermediaries to communicate with each other and may follow peculiar protocols.
Payment networks are a prime example, as they often require several intermediaries. Data is not easily shared due to different networks and standards as well as privacy concerns, while regulatory hurdles and outdated technology can hamper transactions. For instance, cross-border payments in China require a payee’s telephone number for global automated clearing house (ACH) payments, highlighting the need for tailored payment methods based on individual country regulations.
Many of these regulatory issues trip up cross-border transactions thanks to differing national or even regional requirements, anti-money laundering compliance and data privacy laws. Some international issues stem from the lack of an agreed-upon framework or template to share data in a smooth and timely fashion.
Decentralized finance (DeFi) systems, on the other hand, enable interoperability by default. DeFi is built on permissionless blockchain networks and operates through decentralized applications (dApps). While traditional finance systems rely on intermediaries to facilitate transactions, dApps provide direct access to financial services.
Ways to solve interoperability challenges
The regulatory issues that hinder many existing traditional finance payments platforms may soon be a thing of the past.
ISO 20022 adoption and standardization will lead to efficient and streamlined payment processes
ISO 20022, for example, is an open global standard for financial information that promises to bring a standardized approach to financial messaging. It’s set to enhance data quality, increase interoperability and streamline operations across banks and corporations worldwide. By November 2025, financial institutions using SWIFT must fully transition to ISO 20022 standards for cross-border payments, replacing the older messaging standards.
The new standard may spark a revolution in financial data management. SWIFT, the world’s leading provider of secure financial messaging services, states that ISO 20022 will provide “consistent, rich, and structured data that can be used for every kind of financial business transaction.”
In other words, it is a common, global language used by financial institutions when exchanging electronic messages, including payments messages. This standard enables the inclusion of richer, more structured transaction data in payments messages and supports the exchange of payments data between financial institutions and market infrastructures. It aims to offer more transparency and remittance information when making payments, enhancing the ability to carry structured data. This can help legitimate transfers and identify fraudulent ones.
SWIFT says the adoption of the ISO 20022 data standard is helping speed up the move toward greater integration and digitization of the entire payments industry. It’s also supporting the drive for enhanced interoperability and creating more visible, usable data and analytics. The introduction of “richer data” through ISO 20022 is pivotal in enhancing interoperability, providing streamlined processes, real-time tracking, improved fraud prevention, better regulatory reporting, secure payment information and more detailed remittance information for better interoperability.
Blockchain’s promise to improve interoperability and integration
Blockchain networks address interoperability challenges by utilizing universal data standards and protocols in their shared, standardized and decentralized systems.
Blockchain networks can execute transactions, delivering on the promise of “transformation of a siloed and fragmented approach to making end-to-end value chain integration more attainable,” according to the World Economic Forum. However, “the importance of interoperability is imperative. In the simplest terms, successful interoperability allows the user to trust that ‘I know what I see is what you see.’”

Blockchain networks use a variety of technologies and protocols to address interoperability challenges.
The distributed ledger technologies do this by using standardized protocols and cutting out the middleman intermediaries. Blockchain technologies such as bridges and cross-chain protocols can transfer assets, payments and data between different blockchain networks without routing through a central exchange.
Cross-chain bridges are as important for crypto as ACH transactions are between bank accounts.
The Nexus for interoperability in financial services
The evolution toward a fully cashless society requires greater interoperability for payments, whether they are made via blockchain,, instant payments or traditional banking institutions.
There is still clearly more work to be done, but progress is being made to create and operate these systems to make seamless cross-border payments less expensive and much faster while still meeting standards for oversight and regulations. Businesses must navigate multiple payment rails and integrate multiple steps into their cross-border payment strategies to ensure seamless transactions.
Project Nexus, an initiative from the Bank for International Settlements (BIS), is standardizing how instant payment systems (IPS) connect to each other. The single connection through the Nexus enables faster payments.
The project is now in its third phase to bring access, speed and affordability to the cross-border payments industry.
“There’s already strong momentum and interest in Nexus, and I don’t see that dying down as things progress,” Rahul Bhargava, consultant for the World Bank, says on the Converge podcast. “It’ll be interesting to see how holistically Nexus is integrated into existing payment ecosystems and how other countries adopt Nexus as part of their business, either directly or indirectly.”
The plan is to integrate instant payment systems all over the world, allowing them to handle various currencies while adhering to regional and local standards of compliance. This integration will also need to ensure regulatory compliance to maintain the integrity and security of the payment ecosystems.
Bhargava believes the payments business is progressing on that path toward interoperability despite the industry’s fragmentation.
“The real fragmentation is something which is definitely another factor for Nexus, the G20 and the BIS to consider,” Bhargava says. “And I believe that the way they have structured Nexus is really the fundamental best practices for the movement of money, which will support the extension tomorrow, if needed, to other forms of money.”

The future of cross-border payments
The future of cross-border payments will likely be shaped by emerging technologies such as blockchain and artificial intelligence. These technologies can potentially create a more efficient, secure and transparent payment system, reducing the need for intermediaries and minimizing the risk of errors.
Additionally, the increasing adoption of digital payment methods, such as mobile wallets and online banking, will likely drive growth in cross-border payments. As the global economy continues to evolve, businesses must stay ahead of the curve and adapt to the changing landscape of cross-border payments.
Choosing a global payments platform
Choosing the right global payments platform is critical for businesses that need to make cross-border payments. When selecting a platform, businesses should consider factors such as the range of payment methods supported, the level of integration with existing systems, and the strength of the platform’s compliance and risk management capabilities. They should also evaluate the platform’s ability to handle multiple currencies and languages, as well as its capacity to support high-volume transactions.
Navigating a path to interoperability
While Nexus and other projects and systems are working to achieve interoperability that will connect disparate systems and lower costs, it remains paramount to work with a trusted partner who knows their way around the current fragmented payments platforms and who offers a safe, secure system to transmit international transactions — a trusted partner like Convera.
Want more insights on the topics shaping the future of cross-border payments? Tune in to Converge, with new episodes every Wednesday.