Interoperable payments – why now is the time to connect the world

As in any structure that grows organically, the global payments ecosystem has grown in a fragmented manner. This means significant variance in regional connectivity, data management and compliance standards. In a moment where payments are increasingly real-time, interdependent and international, disparities in infrastructure and regulatory requirements pose a risk leading to inefficiencies, delays and vulnerabilities.

Cross-border payments have been one of the fastest growing areas of transactions, with flows reaching about $150 trillion in 2022, a 13% increase in a single year. Meanwhile, in 2023, real-time payments accounted for $266.2 billion transactions globally , representing a year-over-year growth of 42.2%. The challenge for businesses and financial institutions is that the rails to keep these payments moving are often lacking in consistency, speed and transparency.

The globalisation of payments

While the goal of financial institutions has long been to streamline cross-border transactions, differing regulatory environments and technological limitations make it harder to provide the connectivity, speed and service their customers expect.

The lack of a unified global processing network leads to delays, lost data and added complexities around compliance screening, all of which in turn increases operational costs for financial institutions and end consumers. This puts pressure on the ability for an international business to expand into new markets.

For example, cross-border payments traditionally rely on a network of correspondent banks. This system has been a particular challenge for emerging markets, which have grown in importance as they continue to outperform many developed economies, driving demand for efficient payment solutions.

For businesses wishing to transact into these markets, processing can still be slow and prone to errors, negatively impacting the end-customer experience and making it harder to find and retain local workers.

To remain competitive and collaborate efficiently, global businesses need access to faster, more efficient payment solutions that meet consumer demand for real-time transactions.

A world of interoperable payments

In countries like India and Brazil, real-time payment systems such as UPI and PIX, respectively, have transformed how domestic payments are made, with India processing over 129 billion real-time transactions in 2023 alone . However, the challenge remains in connecting real-time payments systems such as these so payments can be made between schemes instantly.

Fintech companies and global payment providers are pushing hard to close that gap. By interlinking fragmented systems and providing a common global payments infrastructure, fintechs are helping financial institutions address the challenges of today’s complex payment environment.

At Nium, we’re focused on building global payout networks that take on the heavy lift of establishing partnerships and connections across various regions, enabling institutions to access real-time payments with a unified interface, at a local level.

But the journey to make this a reality takes more than just rails – users need the ability to connect to this global network.

Using banks’ existing Swift infrastructure

When it comes to bringing payments up to speed, banks face a choice – build distinct connections to each real-time payment system globally or build off their existing capabilities through partnerships. When it comes to cost, risk and speed of deployment, the latter has clear advantages.

Banks rely on Swift, which has built a robust and resilient global network fostering security and transparency, and Nium has developed a new solution that utilises the Swift network. This allows banks to leverage their existing Swift infrastructure and capabilities to access Nium’s global real-time payments network.

This connection to Nium via Swift provides the ability for banks to rapidly accelerate their payment capabilities, with minimal expense or development resources required. That means the ability to initiate, track and reconcile payments in real-time.

In Nium’s own research on high-volume transaction corridors, there’s scope to deliver up to 80% of transactions in real-time. Financial institutions can also lower processing fees by up to 80%, providing more transparent FX rates and ensuring funds arrive without hidden costs.

To paraphrase American author William Gibson, “Real time payments are already here, they’re just not evenly distributed”. The technology to make this a reality is ready – banks that embrace it have a chance to lead the way in distributing the future.