Definition ∞ An Interoperable Payment System enables different payment networks, platforms, or financial institutions to exchange transactions seamlessly. This allows funds to move across disparate systems without requiring manual conversions or intermediary steps. Such systems significantly enhance efficiency, reduce friction, and lower costs in financial transfers.
Context ∞ The current discussion focuses on modernizing global payment rails to support instant, low-cost cross-border transactions, often leveraging blockchain technology. A key debate addresses the technical standards and regulatory frameworks needed to achieve true interoperability between traditional finance and digital asset networks. Future developments involve the widespread adoption of standardized APIs, blockchain bridges, and central bank digital currencies designed for cross-platform compatibility.
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