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).
What is Project Nexus?
- It is a multilateral international initiative to enhance cross-border payments by connecting multiple domestic instant payment systems (IPS) globally.
- Project Nexus is conceptualised by the Innovation Hub of the Bank for International Settlements (BIS).
- It aims to connect the IPSs of India, Malaysia, Philippines, Singapore, and Thailand.
Why the Need?
- The RBI has been collaborating bilaterally with various countries to link India’s Fast Payments System (FPS) – UPI, with their respective FPSs for cross-border Person to Person (P2P) and Person to Merchant (P2M) payments.
- While India and its partner countries can continue to benefit through such bilateral connectivity of FPS, a multilateral approach will provide further impetus to the RBI’s efforts in expanding the international reach of Indian payment systems.
- In over 70 countries today domestic payments reach their destination in seconds at near-zero cost to the sender or recipient. Connecting these IPS to each other can enable cross-border payments from sender to recipient within 60 seconds (in most cases).
Benefits of the Platform
- Project Nexus is designed to standardise the way IPS connect to each other.
- Rather than a payment system operator building custom connections for every new country that it connects to, the operator can make one connection to the Nexus platform.
- This single connection allows a fast payments system to reach all other countries on the network and significantly accelerate the growth of instant cross-border payments.