Bank Negara Malaysia (BNM) revealed that it has successfully linked Malaysia’s instant payment system with Singapore’s and the Eurosystem’s payment systems via the Project Nexus prototype model. This highlights the possibility of developing a network that allows countries around the world to link their payment systems with improved cost and efficiency.

For context, Project Nexus was announced back in November 2021, and was led by the Bank for International Settlements (BIS) Innovation Hub. It also involved the joint effort between three central banks – BNM, the Monetary Authority of Singapore (MAS), and the Bank of Italy (Banca d’Italia) – as well as payment service operators, PayNet and Banking Computer Services (BCS).

The key idea behind Project Nexus is to test whether it is possible to develop a standardised and multilateral network that can accommodate the differences in instant payment systems from countries all over the world – without homogenising them. If successful, then payment system operators who wish to provide cross-border payment services will not need to build custom connections for every new country that it wishes to connect to. Rather, it will only need to establish one connection to the Nexus network.

Fast forward to today, such a network has been proven to be feasible through the Nexus prototype, tested with the payment systems of Malaysia, Singapore, and Italy (with Italy being part of the Eurosystem, the monetary authority of the eurozone). “Test payments were initiated using only the mobile phone numbers or the recipients’ company registration numbers via the Eurosystem’s TARGET Instant Payment System (TIPS), Malaysia’s Real-Time Retail Payments Platform (RPP), and Singapore’s Fast and Secure Transfers (FAST) payment system,” BNM shared in a joint statement.

Assistant governor of BNM, Suhaimi Ali said that BNM had joined the Nexus Project to help realise the shared vision of faster, cheaper, and more accessible cross-border payments – an effort that ultimately paid off.

“We are pleased to to participate in Project Nexus Phase 3 to realise that vision. Building on the success of the Nexus proof-of-concept, we are well-placed to accelerate the development of this next-generation payment connectivity model to bring significant benefits to the people of Malaysia and ASEAN,” Suhaimi further said.

Specifically, Phase 3 of Project Nexus will involve helping the central banks from five ASEAN countries – BNM, MAS, Bank Indonesia, Bangko Sentral ng Pilipinas (BSP), and Bank of Thailand – in their ongoing efforts to connect their countries’ domestic payment systems. This essentially will enable cross-border transactions across a combined population of approximately 500 million people. The BIS will also assist these central banks with their design processes.

Ultimately, it is hoped that Project Nexus can eventually become a blueprint that is implemented globally. “To achieve this, they (BIS and the five central banks) will aim to establish a Global Advisory Panel of central banks and payment system operators to advise on the project’s development beyond the Southeast Asian region. The Bank of Italy and the European Central Bank will be invited to join this panel,” BNM explained.

(Sources: Bank Negara Malaysia, BIS Nexus Report)

• TAGS:
• Bangko Sentral ng Pilipinas (BSP)
• Bank Indonesia (BI)
• Bank Negara Malaysia
• Bank of Italy (Banca d'Italia)
• Bank of Thailand
• Banking Computer Services (BCS)
• BNM
• Cross-Border Money Transfers
• Cross-Border Payments
• Cross-Border QR Payments
• Monetary Authority of Singapore
• Monetary Authority of Singapore (MAS)
• Payment Network Malaysia Sdn Bhd
• PayNet
• Project Nexus
• The Eurosystem