Interoperability Explainer

Where are the barriers to interoperability? How a hybrid rails network can overcome them.

Successful interoperability makes international payments as fast, cheap and safe as a domestic transfer. Domestic payments have become instant and smooth, but connecting with other systems within the region, or globally, is still often slow and expensive. Interoperability aims to improve the connection of different national payments networks, currencies and banking systems.

So what are the three main barriers to successful interoperability? And how can organisations overcome them?

When funds are not available

It sounds like a technical challenge, but interoperability also relies on an integrated network. Systems can be technically connected, but not economically interoperable. This can still result in friction for your cross-border payments. For example a payment message can move seamlessly between Bank A and country Z, but if there is insufficient liquidity in the receiving country, the payment can be delayed, repriced or rerouted. In effect, participants may have to maintain balances in multiple jurisdictions, which undermines the efficiency benefits of interoperability.

Lack of access to exotic currencies

Businesses transacting in GBP, EUR or USD may have no problem, but other currencies can be harder to access. This can make it difficult for users to transact efficiently in the currencies they need. There is often a currency-gap in the region where cross-border commerce is growing fastest. In Sub-Saharan Africa, for example, payment speed is being used as a de-risking tool as faster cross-border payments become an economic enabler for businesses in the region. It’s also growing at pace: forecast to ‘firm to 4.3% in 2026’ according to the International Monetary Fund^[1]. And yet, the interoperability gap means that cost and settlement time increases and participants may have to leave their network to find what they want. It’ll happen, but only eventually.

When value leaves the system

This is often the clearest sign that interoperability is incomplete. When a network cannot settle in the required currency, the user must find a corresponding bank or FX broker outside both networks. This means a loss of visibility and transparency, plus higher operational risk and more reconciliation work. Every time a participant leaves the network, interoperability benefits are diluted.

One solution to this are hybrid rails within an extensive payment network. Hybrid rails improve interoperability because:

• Liquidity can be pooled across multiple routes. This reduces trapped capital and settlement delays.

• It gives access to more currencies. The partners in a network expand its practical reach.

• The need to leave is reduced. So the transaction becomes: Network → destination, which improves transparency and predictability.

• It offers greater resilience. The network can switch routes if a rail is expensive or unavailable, so payment completion rates are better.

Interoperability allows value to move efficiently across borders. Many regions are looking at how to improve it for cross-border payments in their regions, to benefit economic growth. A payments network with hybrid rails helps participants to stay within a single interoperable network, while reaching more markets with greater certainty and pace. It does this by aggregating liquidity, supporting a wider range of currencies, and dynamically selecting the most efficient settlement routes.

When interoperability works well, the sender sees a single transaction while the network manages the complexity. We expect to see more developments in this area in this year and into 2027.