Interoperability and Digital Finance: Emerging Guidance for Funders

Digital payments can help poor people enter the world of formal financial services, but often digital payment systems are not interoperable. When customers are unable to transact outside the network created by their own financial services provider, they must find complicated, costly workarounds to transact with customers of other providers. Interoperability, on the other hand, makes it easier and more convenient for customers to transact with each other. Interoperability may also bring greater competition to financial services by removing barriers to entry for smaller providers.

This technical note explains how funders can support instant payments systems that are interoperable and facilitate the type of small-dollar, mobile payments often made by low-income customers. It helps funders to understand the concept of interoperability, how instant payments systems can advance financial inclusion, and what funders can do to support their development. It builds on the more detailed CGAP Technical Guide, “Building Faster Better: A Guide to Inclusive Instant Payment Systems.”