This article was written by Kamran Hedjri, CEO, PXP Financial.
A quiet yet powerful transformation is unfolding across financial services, one that promises to redefine how we pay and get paid: the rapid advancement of interoperability.
Payments interoperability is essentially the framework enabling seamless interactions between once disparate systems. In other words, a user can initiate a payment from one platform and have it processed and received by another, regardless of the specific providers involved.
The implications of strengthened connections are simple - faster, smoother, more customised payments. Ultimately, interoperability equates to a vastly improved payment experience.
Interoperability should not be viewed as a passing trend. Rather, interoperability is a sweeping wave of transformation set to influence various digital aspects of people’s lives over the next few years.
Furthermore, as platforms synergise capabilities and connectivity increases, the barriers between the physical and digital worlds will start to break down.
Transitioning between, for example, in-store or online shopping or working in person versus remotely can create friction. With interoperability creating smoother and more shared experiences, this friction will be a thing of the past.
Realising interoperability’s far-reaching advantages
Interoperability benefits cascade through the payments ecosystem. Understanding the difference between payment orchestration and interoperability helps to make these benefits clear. While payment orchestration means managing and optimising payments within a system, interoperability goes much further – enabling smooth and fluid connectivity between diverse payment platforms.
This ability for disparate systems to seamlessly interact and exchange data delivers cumulative results that uplift experiences across the board.
For financial institutions, businesses, and consumers alike, consolidated platforms and frictionless money movement will become the norm. Fewer accounts are needed as interoperability allows transfers to flow seamlessly across multiple systems and platforms regardless of the specific provider. Operational efficiency is also improved by eliminating obstacles that previously slowed transactions. Cost reduction is an inevitable outcome.
Regulatory burdens are also eased thanks to interoperability’s data sharing capabilities. Compliance and security oversight are simplified for financial infrastructure which is able to share transparent transaction streams, rather than needing to rely on siloed data. This enhanced visibility assists in recognising fraudulent activities across once fragmented ecosystems.
Momentum is gathering globally. Cross-border payments are set to achieve unprecedented flexibility as barriers to international trade and global commerce evaporate. Not only does interoperability streamline cross-border payments, but it also fosters innovation and healthy competition between industry players. In fact, individuals everywhere will find economic doors opening both in domestic domains and global digital marketplaces. Interoperability may therefore prove to be a fundamental driver of financial inclusion as localisation requirements are reduced through seamless global connectivity.
For underserved and unbanked populations, the mobile banking connections facilitated by interoperability unlock essential financial services previously walled off by persistent security issues and technical infrastructure deficits. Interoperability can streamline participation and fuel economic mobility pathways for entire populations.
Interoperability can also be beneficial for governments aiming to streamline state payments systems. Integrating and reconciling Central Bank Digital Currency (CBDC) technology on an interconnected scale provides the foundations for governments to truly revolutionise current payment infrastructure.
Harnessing interoperability's potential
Fintech and payments industry leaders are actively exploring the possibilities, from expanding the availability of digital currency options, integration with blockchain and decentralised finance, to driving personalisation in financial services.
Fintechs aiming to harness the benefits of interoperability should first look to adopt a culture of innovation, creativity, disruption, and curiosity, with customer service at the heart of the business. Supporting customers throughout integration, addressing issues, and actively seeking feedback while implementing cutting-edge technologies to new use cases is vital.
PXP Financial has the expertise and experience to guide businesses through the shift to interoperability. As a leading payments provider, we have a long heritage of staying ahead of the game when it comes to innovating and adopting new solutions.
As well as our extensive connections with a diverse range of payment platforms, cards, alternative payment methods (APMs), open banking applications, and cash vouchers, we have the technical know-how to bring these together to create seamless experiences across online channels and in-store. This makes PXP Financial the partner of choice for embracing interoperability in 2024 and beyond.
Selecting a partner which can navigate the complexities of international payments and transfers is vital for reaping the emerging benefits of interoperability over the next five years. PXP Financial is the partner of choice for seamless cross-border payments, with an acquirer agnostic approach and focus on frictionless payments which increases authorisation rates. We enable eCommerce around the world by offering 120+ alternative payment methods and supporting 11 settlement currencies. Our Cross Border Product benefits from integrations to Mastercard´s Cross-Border Platform and offers multiple payout options that meets the needs of both banked and unbanked recipients. Meanwhile, our acquiring license allows us to connect our customers directly to card schemes with no need for an intermediary.
About PXP Financial
The ultimate end-to-end payment platform: PXP Financial provides a single unified platform to accept payments online, on mobile and at the point of sale. Powered by in-house acquiring we offer a suite of 120+ alternative payment methods & financial services, and PXP processes over EUR 22.7 billion annually through our unified gateway. We take pride in our robust technology, our unique team of industry veterans and years-long track history powered up by our expertise and roots deep in Gaming. Whatever your business needs today or tomorrow, PXP Financial’s innovative payment platform will support your business growth across all continents, including US with all the payment services you will ever need from one source, wherever your business takes you. To find out more about PXP Financial family of companies, visit: www.pxpfinancial.com.
