Context: The Reserve Bank of India (RBI) has joined Project Nexus, a multilateral international initiative to enable instant cross-border retail payments by interlinking domestic Fast Payments Systems (FPSs). 

• India’s Unified Payments Interface (UPI) and FPSs of Malaysia, the Philippines, Singapore and Thailand will be interlinked through Nexus. Going ahead, the platform can be extended to more countries.

• In over 70 countries today domestic payments reach their destination in seconds at near-zero cost to the Sender or Recipient. 

• This is thanks to the growing availability of instant payment systems (IPS). Connecting these IPS to each other can enable cross-border payments from Sender to Recipient within 60 seconds (in most cases).

What is Project Nexus?

• Project Nexus is a multilateral international initiative among central banks and financial authorities to enable instant cross-border retail payments.

• Initiated by: Innovation Hub of the Bank for International Settlements (BIS)

• It is the first BIS Innovation Hub project in the payments area to move towards live implementation

• It focuses on linking domestic instant payment systems (IPS) globally, enabling near-instantaneous transactions between countries.

• Founding members of Project: Central banks of India, Malaysia, Philippines, Singapore, and Thailand.

• The platform standardizes the connection process, making it easier for countries to join and allowing for rapid expansion of cross-border payment capabilities.

Key Objectives

• Standardization of IPS Connections: Instead of creating custom connections for each country, Nexus provides a unified platform where a single connection enables access to all member countries.

• Facilitation of Instant Cross-Border Payments: By interlinking FPSs, Project Nexus aims to reduce the time and cost associated with cross-border transactions, aiming for transaction times within 60 seconds in most cases.

• The platform is expected to go live by 2026.

Benefits of Project Nexus

• Enhanced Efficiency: Standardized connections streamline the process of linking domestic FPSs, reducing the complexities involved in establishing cross-border payment networks.

• Reduced Costs: Near-zero costs to both senders and recipients are expected due to the efficiency gains and elimination of intermediary fees associated with traditional cross-border transactions.

• Improved Accessibility: Enables broader access to instant cross-border payments, promoting financial inclusion and facilitating smoother international transactions for individuals and businesses alike.