Interoperability between instant payment systems

How we’re helping interlink instant payments systems and unlocking instant payments across borders.

Advancements in instant payments services have, in recent years, largely been restricted only to domestic markets.

However, with regulatory barriers coming down all over the world, we’re working with payments market infrastructures to enable system interoperability and allow instant payments to flow across borders around the clock.

We’re committed to enabling instant payments across borders to deliver on our strategy of instant and frictionless payments. In 2023 we helped enable cross-border payments destined for Europe to reach beneficiaries in seconds through seamless connection to instant domestic payment systems.

This work will be critical to achieving the G20’s goals for cross-border payments which are aimed at improving the access, speed and transparency to international payments, while also reducing costs.

We have seen a trend of markets introducing regulatory changes to open up their instant payments systems to receive cross-border payments.

For instance, the UK introduced the Payments Originating Overseas scheme, the EPC introduced its rulebook for One-Leg-Out transactions and Australia introduced the International Payments Business Service (IPBS) on NPP for Inbound International Payments.

In Asia, we have seen a number of bilateral interlinking initiatives, such as between Singapore and Thailand in 2021, and between Singapore and India in March 2023, with Singapore and Malaysia interlinked in November 2023.

We are also seeing emerging multilateral initiatives, such as Project Nexus, driven by the BIS Innovation Hub in Singapore, which will link the Instant Payments Systems of Thailand, Indonesia, Malaysia, Singapore and the Philippines.

Models for connecting up instant payments infrastructures

From our unique experience in connecting up payment systems, we have seen four distinct models emerge for how to enable instant payment infrastructures to interoperate across borders.

Traditional correspondent banking approach

The first model follows the traditional correspondent banking approach, whereby cross-border payments flow into domestic markets via domestic Real Time Gross Settlement (RTGS) systems.

One-Leg-Out approach

The second model provides access to an instant payment system via an intermediary bank, in what is known as One-Leg-Out (OLO); an example of this approach is the European Payment Council (EPC)’ Euro OCT Inst scheme.

Bilateral and multiple payment system interlinking

The third model involves directly interlinking two instant payment systems bilaterally, and the fourth takes a similar approach but interlinks multiple instant payment systems together in a multilateral model. A few bilateral links have gone live, such as those between the payment systems of Thailand and Singapore, and India and Singapore.

Ensuring interoperability

Ensuring that instant payment systems can seamlessly interoperate is critical for us to achieve our strategy of instant and frictionless payments for all, as well as meeting the G20’s goals for cross-border payments. We’re supporting interoperability innovations worldwide. Swift is helping to power the European Payment Council (EPC) Euro OLO Instant scheme to deliver instant payments across currency zones twenty-four hours a day.

In addition, we actively participate in several market initiatives exploring and implementing emerging models of interoperability, including the evolution of the existing correspondent banking model, initiatives to directly interlink market infrastructures and solutions for interoperability with emerging CBDC payment systems.