The Bangko Sentral ng Pilipinas (BSP) and four other central banks in the region will connect their domestic instant payment systems (IPS) through the Bank for International Settlements’ (BIS) Nexus Project.

BSP Governor Felipe M. Medalla on Thursday, March 23, said the second phase of the connectivity project will “enable us to harness the potential of multilateral connectivity of fast payment systems among the first-mover countries in the ASEAN.”

“Building on this momentum, we look forward to working with the BIS and our counterparts in the ASEAN in the enhancement of cross-border real-time retail payments that can facilitate financial integration within the region. With an expanding digital sector and remittances remaining to be important drivers of growth, the Philippines remains committed to its pursuit of necessary reforms for a more seamless global payments landscape. We believe this project is a concrete step in this direction,” said Medalla.

The Nexus, which is a prototype developed by the BIS Innovation Hub Singapore Centre with the central banks of Italy, Malaysia and Singapore, connects payment system operators with the Eurosystem’s TARGET Instant Payment Settlement (TIPS), Malaysia’s Real-time Retail Payments Platform (RPP) and Singapore’s Fast and Secure Transfers (FAST).

In a joint statement on Thursday, the BSP, BIS and the central banks in the ASEAN trade bloc said the Nexus’ standardised and multilateral network will link the different IPS for a wider connectivity and multilateral cross-border network.

“In the next phase, BIS and the central banks of Indonesia, Malaysia, the Philippines, Singapore and Thailand will jointly work towards connecting their domestic IPS through Nexus,” said BSP et al.

The collaboration includes Bank of Italy, Central Bank of Malaysia (BNM) and Monetary Authority of Singapore (MAS), and the payment systems operators PayNet and Banking Computer Services (BCS).

The BIS and the five central banks including the BSP said the next step for Nexus is to be implemented globally. “To achieve this, they will aim to establish a Global Advisory Panel of central banks and payment system operators to advise on the project’s development beyond the Southeast Asian region. The Bank of Italy and the
European Central Bank will be invited to join this panel,” according to the
statement.

Based on a November 2022 Memorandum of Understanding on Cooperation in Regional Payment Connectivity, the Bank Indonesia, BNM, BSP, MAS and the Bank of Thailand will leverage experiences from Phase I and Phase II of the Nexus project to connect IPS and facilitate cross-border transactions for some 500 million people in the region.

Cecilia Skingsley, the head of the BIS Innovation Hub, said Nexus “paves the way for further development, and we look forward to collaborating with our partner central banks on the next phase of the project.”

The Nexus prototype connected the test IPS of the Eurosystem, Malaysia and Singapore and made it possible to transact payments via mobile phones.

The BIS also announced on Thursday that the next phase of the project is to “work on the real-world potential of a multilateral network that could be scaled up across more countries.”

The BIS and the central banks said the test payments were initiated using only the mobile phone numbers or the recipients’ company registration numbers via the Eurosystem’s TIPS, Malaysia’s RPP and Singapore’s FAST payment system.

The Nexus report was also published Thursday, detailing early experiments and technical specifications for interlinking of payment systems, the statement said, as well as the practical applications.

The central banks including the BSP said Nexus intends to support the G20 priorities of improving the cost, speed, access and transparency of cross-border payments by connecting domestic IPS across multiple countries through a standardised and multilateral approach. “It is designed to accommodate differences between IPS, rather than trying to homogenise them,” said BSP and other central banks.

In the Philippines, the BSP has the PESONet and InstaPay under the National Retail Payment System which was launched in 2017.

PESONet enables high-value transactions and may be considered as an electronic alternative to the paper-based check system. InstaPay is a real-time, low value electronic fund transfer facility for transactions up to P50,000 and is most useful for remittances and e-commerce.