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The Bank for International Settlements (BIS) has announced plans to expand the world’s largest instant payment system (IPS). On Monday (July 1), BIS revealed that it had completed the blueprint for the third phase of Project Nexus, which aims to connect the instant payment systems of several central banks.
In the upcoming fourth phase, central banks including Bank Negara Malaysia, Bangko Sentral ng Pilipinas, the Monetary Authority of Singapore, and the Bank of Thailand, along with their domestic IPS operators, will be joined by the Reserve Bank of India. This addition will integrate India’s Unified Payments Interface (UPI), the world’s largest IPS, expanding the potential user base significantly.
Project Nexus aims to standardize the way domestic IPS connect with each other. Instead of creating custom connections for every new country, an operator would only need to connect to Nexus. This single connection would then facilitate instant payments across all countries in the network.
“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,” said Agustín Carstens, general manager of the BIS.
In related developments, the use of instant payments in the transportation industry was recently highlighted in a conversation with Cheryl Gurz, vice president of RTP product development at The Clearing House (TCH).
“For these businesses, instant payments are really about precision,” Gurz noted, emphasizing that the advent of instant payment systems marks a significant shift in transaction processes, especially for small- to medium-sized businesses.
Gurz explained that the decentralized nature of the transportation industry often leads to cash flow uncertainties. However, with the TCH’s RTP network operating 24/7, businesses can make payments anytime, ensuring they align perfectly with their cash flow needs.
“They’re out on the road, it’s 10 p.m. on the west coast, and they have a payment due the next morning. With the east coast supplier, they can make that payment within 30 seconds and it’s settled. So they don’t have to worry about timing or banker’s hours,” she said.
This integration of instant payment systems promises to enhance the efficiency and reliability of transactions globally, benefiting a wide range of industries.
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