Three central banks-Italy, Malaysia, and Singapore-have successfully finished a year of testing an instant payments network, laying the groundwork for a potential mobile phone-accessible global rollout, a Reuters report tells us.
The experiments were a component of the Bank for International Settlements (BIS) Nexus project, which aimed to make international payments easier.
Building Instant Payment Networks
There are already more than 60 separate instant payment networks operating around the world, which causes transfers to be slow and costly. The Nexus project seeks to streamline the procedure so that people and businesses all over the world can use it more efficiently, affordably, and conveniently.
Reuters notes that the most recent testing featured payments conducted using only mobile phone numbers as identifiers between the central banks of Italy, Malaysia, and Singapore. The BIS reports that the testing was successful, and the participating countries want to take the project further.
Further Nexus trials will be conducted in Indonesia, Malaysia, the Philippines, Singapore, and Thailand, according to the BIS. The long-term objective is to implement Nexus globally, offering a simple, safe, and economical method of moving money anywhere in the world.
Successful Roll Out
In 2022, BIS developers were able to use Nexus to connect the test systems of three separate existing Immediate Payment Settlement systems, including the TIPS system of the Eurozone, the RPP system of Malaysia, and the FAST payment system of Singapore.
TIPS is a widely utilized payment settlement system in the Eurozone that is run by the Bank of Italy on behalf of the Eurosystem and regulated by the European Central Bank.
Malaysia's RPP system, managed by Payments Network Malaysia and overseen by the Central Bank of Malaysia, allows customers to make real-time retail payments in Malaysia.
Finally, Singapore's FAST payment system, which is run by Banking Computer Services and controlled by the Monetary Authority of Singapore, is noted for its transaction processing speed and security.
Significance of Instant Payments
The advantages of an instant payments network are significant. People and businesses will be able to send and receive money fast and securely no matter where they are. This will increase the accessibility and efficiency of international trade and commerce, boosting economic growth and financial inclusion.
However, establishing a global instant payments network is challenging. To handle the number of transactions, the system must be safe, reliable, and scalable. Regulatory and legal frameworks must also be created to ensure compliance with local laws and regulations.
What's Next for Nexus?
A press release tells us that Bank Indonesia, BNM, Bangko Sentral ng Pilipinas, MAS, and the Bank of Thailand will work towards connecting their countries' IPS in the project's next phase, following their November 2022 Memorandum of Understanding on Cooperation in Regional Payment Connectivity.
The move is expected to facilitate cross-border transactions for a combined population of around 500 million people and build on the experiences gained from Phase I and II of the project.
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