India’s United Payment Interface (UPI) is set to connect with four other Asian central banks to establish an instant cross-border retail payments platform by 2026. Overseen by the Bank of International Settlements (BIS), this initiative could be the beginning of a wider retail network spanning across South and Southeast Asia. While the other countries involved have established some form of cross-border payment relationships in the past, India’s entry into this system could be a game changer.
BIS plans to link each country’s instant digital payment system as part of Project Nexus, its initiative to enhance cross-border payments. In addition to India, Malaysia, Thailand, Singapore, and the Philippines will be the founding members of the platform. Indonesia will serve as a special observer with expectations of joining later. According to the BIS, Project Nexus was tested with a trial run involving Malaysia, Singapore, and the Eurosystem in 2022.
“The collaboration between the Asian central banks will help revolutionize instant cross-border payments,” said Elisa Tavilla, Director, Debit Payments at Javelin Strategy & Research. “Domestic real-time systems are becoming ubiquitous, but real-time cross-border payments are still evolving. International instant payment interoperability is essential for today’s global real-time digital economy.”
India Leads the Way
While the other countries maintain a steady pace of instant payments, India’s UPI handles more digital transactions than any other system in the world. UPI’s total transactions surpassed the 100 billion mark in 2023, solidifying India as the largest and most significant player in the new system.
“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 at the BIS, in a statement.
Other Nations Have Connected
Historically, there have been some ad hoc connections between the participating countries. A cross-border payment system launched in October 2023 facilitated payments for goods and services between residents of Singapore, Thailand, Malaysia, and Indonesia.
Last year, Singapore and India also announced a link between their respective real-time payments schemes to allow for instant mobile phone fund transfers between the two countries. Singapore has established connections with Thailand and is working on a similar link with Malaysia.
A new entity, the Nexus Scheme Organisation (NSO), will be responsible for managing the Nexus protocol. It will be wholly-owned by the central banks from participating countries, including Bank Negara Malaysia (BNM), Bangko Sentral ng Pilipinas (BSP), the Monetary Authority of Singapore (MAS), the Bank of Thailand, and the Reserve Bank of India. BIS will play an advisory role.