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Interlinking Instant Payment Systems is the way to go for the next generation cross-border payments

As the world becomes increasingly connected, the need for fast, efficient, and affordable cross-border payments has never been greater. Yet, despite advances in domestic instant payment systems, cross-border transactions remain slow, expensive, and opaque. The G20 has identified improving cross-border payments as a key priority, aiming to enhance the speed, transparency, and accessibility of international transfers. The solution? Interlinking domestic instant payment clearing and settlement systems—an approach exemplified by the BIS Innovation Hub’s Project Nexus.


Project Nexus: A Blueprint for Cross-Border Payments

Project Nexus is an ambitious effort led by the BIS Innovation Hub in Singapore to connect domestic instant payment systems globally. By leveraging the success of national instant payment schemes, Nexus aims to create a seamless cross-border payment experience that addresses many of the pain points currently plaguing international transfers. Cross currency transactions tend to be slow, expensive and the not really transparant (both on the fees charged to the sender and the receiver, and the payment status itself). Nexus solves this by acting as a unifying layer that standardizes messaging, enforces compliance checks, and manages currency conversion, all while reusing the existing domestic infrastructure.


This approach marks a departure from traditional cross-border payment systems, which often rely on intermediaries such as correspondent banks that introduce complexity and delays. Instead, Nexus facilitates direct interaction between domestic payment systems, dramatically speeding up transactions and reducing costs.



Why Interlinking Domestic Systems is the Way Forward

Faster Settlements

Domestic instant payment systems are already built for volume, efficiency and speed, often settling payments in real-time or near real-time. Interlinking these systems allows cross-border transactions to benefit from the same speed, making international transfers almost as fast as domestic ones. This is particularly critical for individuals and businesses that rely on cross-border payments for day-to-day operations, such as remittances or just-in-time supply chain payments.


Lower Costs

Traditional cross-border payment methods involve multiple layers of fees, often from intermediaries like correspondent banks, which can significantly increase transaction costs. Interlinking domestic systems can eliminate these intermediaries by allowing direct interaction between the payment systems of the sending and receiving countries. This reduction in complexity will naturally lead to lower costs for consumers and businesses.


Increased Transparency

With the direct link between domestic payment systems, there’s increased transparency in terms of tracking payments, understanding fee structures, and knowing the timeframes for settlement..


Enhancing Financial Inclusion

The G20’s goal to improve cross-border payments also aligns with the broader aim of enhancing financial inclusion. By making international payments faster, cheaper, and more accessible, previously underserved markets—such as migrant workers sending remittances back home—will benefit from more affordable and reliable ways to transfer funds. Many of these users already rely on domestic instant payment solutions; expanding this capability across borders would bring enormous benefits.


Leveraging Existing Infrastructure

One of the greatest advantages of interlinking domestic systems is that it leverages infrastructure already in place. Countries have invested heavily in building robust domestic instant payment systems, so extending their functionality to international transactions makes sense from both an operational and a cost perspective. This is a significant efficiency compared to building a completely new cross-border payments infrastructure from scratch.


Solving G20 Goals: Nexus as a Catalyst

The G20 has set ambitious targets for improving cross-border payments, focusing on four key areas: cost, speed, transparency, and accessibility. Interlinking domestic instant payment systems, as proposed by Project Nexus, directly addresses these goals.

Real-World Impact

Let’s consider a practical example. Imagine a small business in Indonesia purchasing supplies from a partner in Malaysia. Traditionally, this transaction could take several days to settle, involve various fees, and require manual tracking. With interlinked instant payment systems, this business can send funds directly from its local bank account, knowing the payment will settle almost immediately, with clear visibility into costs and tracking.


Moreover, for migrant workers in one country sending remittances back home, the ability to send money in real time with minimal fees is transformative. Not only does it provide more certainty and trust, but it also allows families to receive the money when they need it most, rather than waiting days or even weeks for the transaction to clear.


The Road Ahead

Interlinking domestic instant payment systems through initiatives like Project Nexus is not just an incremental improvement; it represents a fundamental shift in how cross-border payments will operate in the future. By focusing on efficiency, cost reduction, and leveraging existing infrastructures, this approach promises to address the G20’s goals while unlocking new possibilities for global commerce and financial inclusion.


The success of such projects, however, will depend on the ability of countries to cooperate on regulatory standards, currency conversion mechanisms, and technology protocols. While the road ahead may have challenges, the promise of a more integrated, faster, and accessible global payment system is within reach, and the groundwork laid by Project Nexus is a significant step in that direction.

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