A new multilateral payment network called Nexus has successfully connected instant payment systems across Singapore, Malaysia, and Europe, paving the way to link five Southeast Asian countries and serve 500 million people.
KEY POINTS
IN SIMPLE TERMS
Nexus is a new system that lets people send money across borders using just a mobile number or company registration number, instead of needing bank details. It works by connecting the instant payment systems of different countries so transfers are faster and safer. Eventually it will link Indonesia, Malaysia, the Philippines, Singapore, and Thailand together.
WHY IT MATTERS
WHERE DO YOU STAND?
Should your country prioritise joining cross-border payment networks like Nexus even if it requires significant technical and regulatory changes?
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It’s official: the future of cross-border payments is here and looking brighter than ever.
Thanks to the Bank of International Settlements (BIS) Innovation Hub Singapore Centre and its partners.
A first-of-its-kind multilateral network has been successfully connected between 3 established instant payment systems (IPS) through the Nexus concept.
The Eurosystem, Malaysia and Singapore’s test versions of their IPS were connected.
This allows payments to be sent across the 3 countries with just mobile phone numbers or company registration numbers.
This means users can now make fast, secure payments worldwide in seconds.
People in Singapore can benefit from this revolutionary system in various ways.
For one, this new system will increase the speed, convenience and security of payments, eliminating the need for manual processing.
Furthermore, Singapore residents can make payments across the region quickly and efficiently without worrying about fluctuating currency exchange rates or lengthy transfer times.
The next step will be to link the domestic IPS of Indonesia, Malaysia, the Philippines, Singapore, and Thailand to facilitate cross-border transactions.
This will cover a combined population of approximately 500 million people.
A Memorandum of Understanding on Cooperation in Regional Payment Connectivity has already been signed by Bank Indonesia (BI), BNM, Bangko Sentral ng Pilipinas (BSP), MAS and the Bank of Thailand.
Sopnendu Mohanty, Chief FinTech Officer (MAS), said: “The successful Nexus prototype between Singapore, Malaysia and the Eurosystem is a breakthrough that proves the technical viability of multilateral instant payment systems connectivity.”
The possibilities are endless.
This system will not only improve payment efficiency but will also contribute to ASEAN’s economic growth.
Businesses can send, receive, and track payments quickly and easily by eliminating the middleman and lowering costs.
This will result in faster fund flows and more efficient operations, allowing businesses to concentrate on providing better products and services to their customers.
Furthermore, this new system will aid in expanding financial inclusion across ASEAN by making it easier for those traditionally underserved or unbanked to access financial services.
The successful connection of the Eurosystem, Malaysia and Singapore’s IPS is a significant milestone for cross-border payments.
By connecting domestic IPS from five countries, Nexus is set to revolutionise how payments are made across the region.
Not only will this system increase the speed, convenience and security of payments, but it will also help to boost economic growth and increase financial inclusion across ASEAN.
This is the beginning of a new era of cross-border payments with endless possibilities.
On 5 April 2023, the BIS will also host a webinar on the Nexus proof of concept. To register, visit Project Nexus: enabling instant cross-border payments.
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