Project Nexus

Project Nexus is an ambitious international initiative aimed at revolutionizing cross-border retail payments by integrating domestic Instant Payment Systems (IPS).

What is Project Nexus?

Project Nexus is a multilateral initiative designed to enable instantaneous cross-border retail payments by linking domestic IPS across different countries. The initiative is spearheaded by the Innovation Hub of the Bank for International Settlements (BIS), which is based in Basel, Switzerland, and owned by 63 central banks, including the Reserve Bank of India (RBI).

Key Features

1. Instant Payment Systems (IPS):
   • Definition: An IPS is an electronic payment system that facilitates rapid inter-bank fund transfers, typically completing transactions and sending confirmations within a minute or less. Examples include India’s Unified Payments Interface (UPI).
   • Purpose: IPS allows for real-time fund transfers, enhancing the efficiency and speed of financial transactions.
2. Objective:
   • Cross-Border Integration: Nexus aims to link the IPS of multiple countries, starting with four ASEAN nations (Malaysia, Philippines, Singapore, and Thailand) and India, creating a streamlined, cross-border payment system.
   • Standardization: By connecting these systems through a unified platform, Nexus simplifies the process of integrating new IPS connections, reducing the need for custom connections between each country’s systems.
3. Expected Launch: The system is planned to go live by 2026.

Benefits of Project Nexus

1. Simplification:
   • Reduced Complexity: By using Nexus, the need for multiple, custom-built connections between different national IPS is eliminated.
   • Lower Costs: Standardizing connections and processes reduces the costs associated with cross-border payments.
2. Speed:
   • Faster Transactions: Payments can be processed in real-time, significantly speeding up the transaction times compared to traditional methods.
3. Transparency and Accessibility:
   • Improved Transparency: The standardized system ensures that transactions are more transparent, with clear tracking and confirmation processes.
   • Greater Accessibility: The initiative supports a broader range of payment service providers, including those with low-cost solutions, enhancing financial inclusion.
4. Scalability:
   • Low-Cost Rail: Nexus offers a scalable infrastructure that can accommodate an expanding number of payment service providers and countries.
5. Interoperability:
   • Harmonization: By fostering standardization across diverse systems, Nexus bridges gaps in interoperability and ensures smoother cross-border transactions.

Strategic Impact

• Alignment with G20 Goals: Project Nexus supports the G20's targets of making cross-border payments cheaper, faster, more transparent, and accessible.
• Innovation and Efficiency: The project represents a significant step towards modernizing and enhancing the efficiency of international financial transactions.

Project Nexus is set to transform how cross-border retail payments are conducted, making them quicker, more cost-effective, and more transparent by leveraging the latest in payment system technology and international cooperation.