9th February 2024
What to expect when it comes to interoperability in digital payments this year?
This is important for merchants like airlines as they need to embrace a cross-border infrastructure that can pave the way for streamlined payments.
The issue here is there are systems in place that facilitate different types of transfers, such as credit card transactions, bank-to-bank transfers etc. For this to work, the set up requires information exchange both within and across these different systems. As for how payment interoperability works, it does its job silently in the background, enabling a link between travel shoppers and businesses, irrespective of their preferred method of paying or being paid. Technically, interoperability means streamlining payment transactions between distinctive applications and infrastructure to enable a simplified processing. So one uses a credit card or a mobile wallet, a message is generated that features requisite details for transfer of funds and further systems receive this for a settlement. This is streamlined with interoperability.
Even on the B2B side, an interoperable set up for payments helps entities receive their funds quicker, as these payments can be processed on the day they are initiated.
A player like Visa acknowledges that the challenge with interoperability is – explosion of networks and payment methods plus each solution working within its own, siloed ecosystem. The company predicts that the industry can expect greater “collaboration across the payments ecosystem — amongst banks, FIs, merchants, technology providers/enablers and issuers — bringing us greater global financial inclusion, accessibility, cross-system compatibility and interoperability” in 2024.
By Ritesh Gupta, Ai Events
