Interlinking payment systems and the role of application programming interfaces: a framework for cross-border payments

Interlinking arrangements for payment systems can be an important element of enhancing cross-border payments as they allow banks and other payment service providers (PSPs) to transact with each other without requiring them to participate in the same payment system or use intermediaries (eg correspondent banks). Such arrangements can shorten transaction chains, reduce overall costs and increase the transparency and speed of payments.

This report – issued as part of the G20 cross-border payments programme – provides a framework to help payment system operators and authorities understand and evaluate the benefits, challenges and risks of interlinking arrangements. In doing so, it also provides an overview of important trends in interlinking arrangements and adoption of application programming interfaces (API) by payment systems, drawing on recent CPMI surveys.

This topic is now attracting increased attention due to recent trends in the payment system landscape, especially the introduction of fast payment systems (FPS) around the world. The emergence of new technologies and an increasing degree of standardisation have also enabled greater technical interoperability, laying the groundwork for current and future interlinking arrangements. These trends herald the potential for such interlinking arrangements, especially among FPS, with the aim of considerably improving the speed, cost efficiency and transparency of cross-border payments.