[KUALA LUMPUR] The Bank for International Settlements (BIS) will work with the central banks of five countries in South-east Asia – Singapore, Malaysia, Indonesia, the Philippines and Thailand – to connect their national payment systems through a cross-border payment gateway.
This will facilitate cross-border transactions across a combined population of about 500 million people, the Switzerland-based BIS said at a briefing on Thursday (Mar 23).
The announcement came after a successful year-long trial of Project Nexus, involving the Bank of Italy, Bank Negara Malaysia and the Monetary Authority of Singapore (MAS), as well as the payment systems operators PayNet and Banking Computer Services.
The test payments were carried out using only the mobile phone numbers or the recipients’ company registration numbers via the Eurosystem’s Target Instant Payment System (IPS), Malaysia’s real-time Retail Payments Platform and Singapore’s Fast and Secure Transfers payment system.
At the briefing, Cecilia Skinsley, the head of BIS Innovation Hub, said the aim is to enable users to make payments using their domestic IPS and complete the transaction within a minute. Once implemented, users will not have to fill in cumbersome foreign bank account numbers or unfamiliar local account details.
Bank Negara Malaysia’s assistant governor Suhaimi Ali said that the next phase of Project Nexus will enable faster, cheaper and more accessible cross-border payments.
“We are well placed to accelerate the development of this next-generation payment connectivity model to bring significant benefits to the people of Malaysia and Asean,” he said.
MAS chief fintech officer Sopnendu Mohanty said the next phase of experiments by the five Asean central banks will be crucial in laying the foundations for future implementation at scale.
“Asean’s progress in regional payments connectivity puts us in good stead to realise Nexus’ vision for a global instant payments network,” he added.
With each successful phase of Project Nexus, the hope is that the system can be expanded to more countries around the world, said Andrew McCormack, the head of the BIS Innovation Hub’s Singapore Centre.
To achieve this, BIS and the five central banks will establish a global advisory panel of central banks and payment system operators to advise on the project’s development beyond South-east Asia. The Bank of Italy and the European Central Bank are among those invited to join the panel.
“Although there are a number of cross-border service providers in the market, the payment network is patchy and disconnected,” he said, adding that different IPS have their own technical processes and challenges in connecting with one another.
Project Nexus was inspired by PromptPay-PayNow, the bilateral payments network between Thailand and Singapore that was launched in 2021.
Under the Nexus blueprint, participating countries will only need to adopt the Nexus protocols once to gain access to the broader cross-border payments network. This removes the need for countries to negotiate payment linkages with each jurisdiction on a bilateral basis.
Image by: Reuters