The Bank for International Settlements (BIS) has completed a comprehensive blueprint for the third phase of Project Nexus, enabling ready participants to work towards the next stage of seamlessly connecting their instant payment systems (IPSs).
Next, a fourth phase for Project Nexus will see Bank Negara Malaysia, Bangko Sentral ng Pilipinas, the Monetary Authority of Singapore, the Bank of Thailand and domestic IPS operators – who worked together in phase three – joined by the Reserve Bank of India, expanding the potential user base to India’s Unified Payments Interface (UPI), the world’s largest IPS.
Digital payments have quickly evolved to send money from person to person in a matter of seconds. However, cross-border payments have failed to keep up and a number of pain points remain.
In an effort to solve these, Project Nexus hopes to connect instant payment systems in different countries through a single hub. Led out of the BIS innovation hub in Singapore, the project has already connected IPSs of the Eurosystem, Malaysia and Singapore, enabling payments to be sent across the three using only mobile phone numbers.
Nexus is designed to standardise the way domestic IPS connect to one another. Rather than an IPS operator building custom connections for every new country to which it connects, the operator only needs to make one connection to Nexus. This single connection would allow the IPS to reach all other countries in the network.
Enhancing cross-border instant payments
“I wish our partners in Nexus every success as they advance the project from concept to reality,” commented Agustín Carstens, general manager of the BIS. “This is the first BIS Innovation Hub project that central banks are moving towards a live phase together with instant payment providers.
“When implemented, it will greatly enhance cross-border payments in line with both the G20 cross-border payments programme and our mission to develop public goods in the technology space to support central banks and improve the functioning of the financial system.
“Even with just the first wave of connected countries, Nexus has the potential to connect a market of 1.7 billion people globally, allowing them to make instant payments to each other easily and cheaply.”
Establishing the Nexus Scheme Organisation entity
To facilitate live implementation, the partner central banks and IPS operators have agreed to work towards establishing a new entity, the Nexus Scheme Organisation (NSO), which will be responsible for managing the Nexus scheme, and continuing the mission to achieve instant cross-border payments at scale.
The NSO will be wholly owned by the central banks and IPS in participating countries, depending on the specific domestic structures. In developing the blueprint in phase three of Nexus, the BIS fulfilled its role of supporting central banks in finding innovative solutions to deliver public goods and one of its key commitments as part of the G20 Roadmap for enhancing cross-border payments.
While the BIS will not own or operate the NSO, it will continue its support by playing a technical advisory role as participating countries work towards taking Nexus live. It will also facilitate cooperation among members and the entry of new participants, helping to realise Nexus’s global ambition.
