Patrick Tan
Key Points:
- The Nexus concept, created by the BIS Innovation Hub Singapore Centre, is a first-of-its-kind multilateral network connecting multiple domestic instant payment systems (IPS).
- Partners in Indonesia, Malaysia, the Philippines, Singapore and Thailand are working together to connect their domestic IPS through Nexus.
- Nexus is designed to support G20 commitments to improve cross-border payments’ cost, speed, access, and transparency.
The Future of Cross-Border Payments Is Here
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 three established instant payment systems (IPS) through the Nexus concept.
The Eurosystem, Malaysia and Singapore’s test versions of their IPS were connected, allowing payments to be sent across the three countries with just mobile phone numbers or company registration numbers. This means users can now make fast, secure payments worldwide in seconds.
The Impact on Singapore
People in Singapore can benefit from this revolutionary system in a myriad of 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 across 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
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.
Conclusion
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.
