BISIH: Project Nexus - Enabling Instant Cross-Border Payments at Scale

The Potential for Connecting IPS Across Borders

Instant payment systems (IPS)[1] are fast becoming a key pillar in a well-functioning financial system. IPS are retail payment systems in which transmission of the payment message and the availability of “final” funds to the payee occur in real-time or near real-time, and on as near to a 24/7 basis as possible.[2] 

Globally, at least 75 IPS are in operation and the number continues to grow.[3] IPS have been a game-changer in making payments more efficient, particularly in the domestic space, by offering fast, low-cost and convenient payment services to individuals, businesses and governments alike. According to ACI Worldwide, the overall IPS transaction volumes grew 42.2% to reach a new high of 266.2 billion transactions in 2023. By 2028, the figure is forecasted to hit 575.1 billion transactions, representing a compound annual growth rate of 16.7%.[4]

Despite improvements in domestic payments driven by transformative events such as the introduction of IPS, cross-border payments have remained relatively slow and costly. For instance, the global average of sending a US$200 equivalent remittance was 6.3% in 2023, which is more than double the 3% target set out in the G20 Roadmap for Enhancing Cross-border Payments (G20 Roadmap). Likewise, the proportion of remittances services that make funds available to the recipient in one hour is 53% (below the target of 75%) while the proportion that do so in one business day is 77% (below the target of 100% in the G20 Roadmap).[5]

The G20 has identified the interlinking of IPS as one of the priority actions to help achieve its targets for cross-border retail payments and remittances by 2027.[6] Supported by their real-time and 24/7 capabilities, connecting IPS across borders has the potential to enhance the speed and lower the cost for cross-border payments, supported by greater access and transparency.

Now a potential solution may be in sight.

Nexus, a Multilateral Blueprint for Connecting IPS Globally

Interlinking of IPS have already been implemented in some countries, with bilateral linkages between two IPS being the predominant model. For instance, the Southeast Asia region is a hotspot for bilateral IPS linkages, with 13 person-to-merchant (P2M) QR payment linkages and four person-to-person (P2P) payment linkages implemented as of May 2024. Based on a survey conducted by the Bank for International Settlements’ (BIS) Committee on Payments and Market Infrastructures (CPMI), 49% of the IPS surveyed are planning to establish initial or additional IPS links within the next two years.[7]

While bilateral linkages are promising, they are not scalable. Establishing each bilateral linkage involves complex technical integration and multi-party legal negotiations since each IPS may have different technical standards, business processes and regulatory requirements. The number of bilateral links required also grows in a non-linear manner. To illustrate, three countries require three links, 20 countries require 190 links and 75 countries require 2,775 links (Diagram 1).[8] Consequently, bilateral links may lead to patchy and disconnected networks where only corridors with strong trade and remittance links may be connected, while lesser used corridors may never be connected bilaterally.

Diagram 1: Bilateral linkages are promising but not scalable

To address this challenge, the BIS Innovation Hub (BISIH) has developed Nexus, which is a blueprint to ...

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