Connecting multiple domestic instant payment systems (IPS) round the globe is Project Nexus, a product of the Bank for International Settlements (BIS).The RBI has been actively collaborating, bilaterally with various nations, to link India's Fast Payments System (FPS) - UPI (Unified Payments Interface), with their respective FPSs for cross-border Person to Person (P2P) and Person to Merchant (P2M) payments.

There are more than 70 countries that have enabled domestic payment systems, allowing users to transfer money almost cost-free. Many of these systems let users send money instantly using a mobile app owing to the global spread of instant payment systems. According to BIS interlinking these systems will enable cross-border payments that arrive within 60 seconds in most cases.

Despite these bilateral collaborations an individual country’s system suffered from too much dependence on the other countries it dealt with which led to slow, costly and inconvenient transactions. Hence, what was urgently needed was a comprehensive approach to efficient cross-border payments that resulted in Project Nexus.

Which Countries are a Part of Project Nexus?

For now, Project Nexus aims to link the FPS of four Association of Southeast Asian Nations (ASEAN) members, namely Singapore, Thailand, Malaysia and the Philippines, with India. These countries will be the founding members and the first movers on the platform. An agreement to launch Project Nexus was signed by the central banks of these countries in Basel, Switzerland on June 30th.

How Will Project Nexus Benefit India?

Being part of Project Nexus offers India and the RBI a long list of advantages. It also offers both businesses and consumers who operate across borders a substantial array of conveniences.

Here are some key advantages:

• Benefits for Businesses
  With Project Nexus, cross-border payments are faster, cheaper and more reliable. This will encourage expansion of international trade and commerce. For small and medium enterprises in India as much as anywhere else, low transaction fees and prompt payment cycles are a boon to cash flow and competitiveness in the global market.
• Quicker Transactions
  Project Nexus greatly reduces transaction times as international payments can be completed in less than one minute by linking these systems. Domestic payments through this process are also completed instantaneously in an even shorter period of time just seconds. This feature is set to greatly improve the efficiency and convenience enjoyed by everybody involved in cross-border payments.
• Reduced Costs
  Cross-border payments for Indian companies tend to cost dearly in exchange rates and message translation fees. Project Nexus could change that as the direct costs for participants in exposure transactions are minimal, and both systems will cooperate in order to keep the overall level of costs involved in cross-border payments down to a minimum.
• Enhanced Reach
  Project Nexus facilitates the process through which Indian banks can extend cross-border payment services to more countries. Historically a bank needs to establish and maintain corresponding accounts in countries where it operates, an arrangement that is very expensive, but in the case of Nexus, these systems provide instant payment services on a common framework interlinking FPS’s.
• Improved Reliability
  Traditional bank payment channels for cross-border transactions may experience delays and are liable to fail, which gives uncertainty about payments to both the sender and receiver. With Project Nexus payments succeed or fail within seconds, avoiding any uncertainty associated with delayed transactions.
• Complete Transparency
  Project Nexus adds transparency which was lacking in the cross-border payments earlier.
  
  In conclusion, Project Nexus provides an excellent chance for India to build global financial linkages, grow faster, while bringing faster, cheaper and safer cross-border payment solutions to both its individuals and businesses. Looking forward to a more interconnected world, its operations will play an important part in shaping the future of global finance.