The Reserve Bank of India, in a recent development has made a significant steps towards transforming the cross border payments by joining the 'Project Nexus' which is a multilateral initiative to interlink domestic fast payment system (FPSs) across several countries.
The main focus of this move by the RBI to join the project is to make international transactions faster, more efficient, and cost-effective.
What is Project Nexus?
The Project Nexus is a concept developed by the Bank for International Settlements (BIS) Innovation Hub with a primary focus on to connect multiple domestic instant system globally and is also the first project of this kind from the BIS in the payments sector.
Who are the founding members?
At the beginning phase of the project include five countries India, Malaysia, the Philippines, Singapore, and Thailand. On June 30, 2024, in Basel, Switzerland, a formal agreement was also signed by the BIS and the central banks of these countries.
Furthermore, Indonesia has been involved as a special observer and is expected to join the platform in the future.
The Project Nexus is a concept developed by the Bank for International Settlements (BIS) Innovation Hub with a primary focus on to connect multiple domestic instant system globally | Canva
The main objective of this project is to standardise the way instant payment systems connect to each other rather than creating custom connections for every new country, payment system operators can make a single connection to the Nexus platform.
Expanding Horizons
The project is set to go live by 2026. Moreover, the RBI and NPCI International Payments (NIPL) plans to extend the reach of India's Unified Payments Interface (UPI) to 20 countries by the financial year 2029.
One of the notable achievement in this include the launch of RuPay cards and UPI connectivity between India and Mauritius in February 2024 and the signing of an MoU with the Central Bank of the UAE in July 2023.
The primary advantage of Project Nexus is its ability to make cross-border payment and by interlinking domestic FPSs, transactions can be completed within 60 seconds, often at near-zero cost.
