Asian Central Banks & India’s UPI Unite for Cross-Border Payments

India’s United Payment Interface (UPI) is set to connect with the central banks of four forward-looking Asian countries to create an instant cross-border retail payments platform. This initiative is executed under the guidance of the Bank of International Settlements (BIS) as part of Project Nexus - a set of efforts for enhancing cross-border payments.

This exciting collaboration is big news, as it’s expected to lay the groundwork for an expansive retail network throughout South and Southeast Asia. In this overview, we shed some light on the roles that the different stakeholders play in this venture and explain how it can influence the dynamics of regional financial transactions. Keep reading for all the details!

The Bigger Picture: What Is Project Nexus?

Project Nexus, launched by BIS in 2022, aims to interconnect the real-time digital payment infrastructures of countries across Asia, including India, Malaysia, Thailand, Singapore, and the Philippines, with Indonesia initially acting as an observer but likely to hop on the train in the near future.

Yet, nowadays, BIS only acts as a consulting body for the project, while the administration of the Nexus protocol is overseen by the Nexus Scheme Organisation (NSO), the ownership of which is entirely in the hands of the central banks of the member nations, namely:

• Bank Negara Malaysia
• Bangko Sentral ng Pilipinas
• Monetary Authority of Singapore
• Bank of Thailand
• Reserve Bank of India

What’s more, Agustín Carstens, General Manager at the BIS, states that even with just the first wave of countries on board, the Nexus Project demonstrates significant potential to transform the payments landscape by connecting a market of 1.7 billion people globally and enabling them to make instant payments easier and cheaper than ever before.

Payment System Synergies Between Asian Countries

It’s crucial to note that a joint project like Nexus does not come as a surprise since the nations involved in it have had ongoing ad-hoc collaborations over the past years.

For instance, a new cross-border payment system streamlining transactions for the citizens of Singapore, Thailand, Malaysia, and Indonesia was introduced in October 2023. The same year, Singapore and India unveiled a partnership between their real-time payment systems, enabling immediate transfers of funds via mobile phones across both countries.

Besides, Singapore has already forged a link with Thailand and is in the process of developing a similar connection with Malaysia. Therefore, the emergence of a unified payment alliance that unites all the major economies across Asia was as expected as it was necessary.

India Steps in to Lead the Way: UPI’s Role in the Collaboration

While every stakeholder involved in the Nexus initiative contributes to its goals significantly, many industry experts agree that with India joining the list of participating countries, the project is set to develop at an accelerated pace.

What Can We Expect from Project Nexus?

All in all, Project Nexus is expected to demonstrate the power of collaboration and innovation in the financial sector. By leveraging the strengths of each member country’s digital payment systems, it is creating a seamless and efficient cross-border payment network that could serve as a model for future global financial integration.

With the strategic guidance of the BIS and the operational leadership of the NSO, the project is well-positioned to address the complexities of international payments. As Nexus continues to evolve, it could not only enhance economic ties between Asian countries but also help to facilitate a new era of global digital financial services that are more inclusive, efficient, and accessible to all.