India signs up for Project Nexus to enable fast payments with Asean countries

The Reserve Bank of India (RBI) said it has joined Project Nexus, a multilateral international initiative that enables instant cross-border retail payments by interlinking domestic fast payments systems.

Designed and developed by the Bank for International Settlements’ (BIS) Innovation Hub, the project aims to connect the fast payments systems of four Asean countries–Malaysia, the Philippines, Singapore, Thailand–and India.

RBI said the initiative, which is expected to go live by 2026, will help expand the international reach of Indian payment systems, and will make retail cross-border payments efficient, faster, and more cost-effective.

RBI joined BIS and the central banks of the other four founding countries–Bank Negara Malaysia, Bank of Thailand, Bangko Sentral ng Pilipinas, and Monetary Authority of Singapore–to sign the deal on 30 June in Basel, Switzerland.

Indonesia, which has been involved in the project since its early stages, will be a special observer.

Agustín Carstens, general manager of the BIS, said, “Even with just the first wave of connected countries, Nexus has the potential to connect a market of 1.7 billion people globally, allowing them to make instant payments to each other easily and cheaply.

When implemented, he said, it will “significantly enhance cross-border payments, in line with both the G20 cross-border payments program and our mission to develop public goods in the technology space to support central banks and improve the functioning of the financial system.”

How Project Nexus works

Before the platform goes live in 2026, the partner central banks and payment operators will form a new entity, the Nexus Scheme Organisation (NSO), to manage the Nexus scheme and achieve instant cross-border payments at scale. Depending on the specific domestic structures, the NSO will be owned by the central banks and/or the payment operators in the participating countries, BIS said.

BIS said in a report on Project Nexus that domestic payments already reach their destination within seconds at near-zero cost to the sender or recipient in over 70 countries, thanks to the growing availability of instant payment systems (IPS).

In April 2021, Singapore and Thailand connected their IPS, allowing payments across the border with just the recipient’s phone number.

Since then, several countries have linked or are linking their IPS. However, connecting countries one-to-one is complex due to different technical standards, business processes, and regulatory requirements.

Each new bilateral initiative requires complex technical integration and multi-party legal negotiation.

BIS said Project Nexus simplifies this process by creating a standardized approach to interlink multiple IPS. Each IPS would need a one-time investment to connect and communicate with Nexus instead of repeated efforts for each new country.