Axelar, Stellar, and Stablecoin Standard Release Report on Retail Blockchain Interoperability

On May 22, Axelar Network published a new report on payment interoperability needs. In collaboration with the Stellar network and Stablecoin Standard, the report investigates system integration. Titled The Path to Seamless blockchain-based retail payment: The Role of Interoperability, it outlines key challenges. The analysis comes as stablecoins reach broader adoption under clearer regulatory guidelines. It notes that financial institutions now plan digital payment offerings with regulatory clarity. The report stresses that decentralized interoperability is essential for secure payment flows. This research offers insight for industry stakeholders evaluating new payment solutions.

Understanding the Interoperability Behind Global Payment Networks

The report points out that traditional retail payment ecosystems rely on a layered structure to process transactions efficiently. This structure includes payment instruments linked to banks, traditional payment networks, and processors handling transactions. Payment instruments cover debit cards, credit cards, and mobile wallets used by consumers every day. Payment networks such as SWIFT and Mastercard enable secure data transfer across different banking systems. Meanwhile, payment processors manage technical tasks, compliance checks, and merchant settlement processes. This seamless coordination keeps user experiences straightforward and reliable in conventional commerce. Global standards like ISO 20022 support consistent messaging across international payment networks.

Current payment networks achieve high interoperability through global messaging protocols and shared standards. For example, a U.S. Visa card works at a European Mastercard terminal seamlessly. Behind the scenes, processors handle currency conversion and regulatory compliance without user awareness. To compete, blockchain-based retail payment solutions must efficiently mirror this coordinated infrastructure. Without similar protocols, blockchain solutions face friction that discourages consumer adoption. Standardized messaging and API connections are key for cross-platform transaction success. Replicating these backend processes is critical for any blockchain retail project to succeed.

Blockchain Improves Transparency and Settlement Speed in Payments

Based on the report, Blockchain technology offers transparency, lower costs, and faster settlements compared to legacy systems. However, platform differences limit direct interaction and create isolated networks. The Stellar network addresses some of these issues through asset anchors and a built-in exchange. Anchors issue tokens for real assets, enabling smooth currency conversion across borders. Its open APIs allow connections to banking systems and payment networks seamlessly. This design helps merchants receive different currencies while customers pay in their preferred currency. Financial standards compliance supports integration with traditional banking rails effectively.

Despite advances, blockchain-based solutions suffer from fragmentation across distinct platforms. Users often face complex steps when converting tokens between separate blockchains. Most chains do not integrate natively with traditional payment networks, limiting user options. Fragmentation reduces transaction speed and increases costs for merchants and consumers. Such hurdles hinder the effective broader adoption of blockchain-based retail payment services. A unified approach to network integration is necessary for real commerce. Developers and stakeholders must collaborate on shared standards and protocols moving forward.

Cross-Chain Protocols’ Essential Role in Blockchain Retail Transactions

Additionally, it is mentioned that a common solution has been custodial bridges controlled by central parties moving assets cross-chain. However, major hacks like Ronin Bridge and the Bybit incident reveal serious vulnerabilities. Centralized control concentrates risk and reduces user trust in digital payment systems. Losses reaching hundreds of millions resulted from single points of failure in these bridges. As a result, users remain cautious about relying on these models for shopping payments. Decentralized alternatives could reduce risk by removing centralized custody from transaction flows. Security and transparency must improve for these systems to gain widespread adoption.

Users Remain Cautious About Centralized Payment Systems

Building a robust blockchain payment ecosystem demands integrated cross-chain protocols. Axelar’s decentralized model uses independent nodes to manage communication without asset custody. It remains open source with transparent governance that records activity on a public ledger. This approach aligns with principles needed by modern payment networks for reliability and trust. Ultimately, seamless integration between blockchain platforms and banks underpins commercial use cases. Collaboration across these technologies will determine blockchain payments’ viability in everyday shopping. Future progress depends on shared standards linking blockchains, regulators, and legacy banks.