23 July 2024

India and Four Southeast Asian Countries Plan Immediate Cross-Border Mass Payment System

3 min read

The central banks of India, Malaysia, Thailand, Singapore, and the Philippines are collaborating to establish a platform for cross-border mass payments by 2026, as announced by the Bank for International Settlements (BIS) on Monday. The BIS, also known as the central bank of central bankers, stated that through Project Nexus, their initiative to enhance cross-border payments, they aim to connect the digital instant payment systems of each country, such as India’s United Payment Interface (UPI) and Singapore’s PayNow.

India and the other four countries will be the founding members of the platform, while Indonesia will participate as a special observer, according to the BIS.

“Even with just the initial wave of connected countries, Nexus has the potential to connect a market of 1.7 billion people worldwide, enabling them to make instant payments to each other easily and affordably,” said Agustín Carstens, General Manager of BIS, in a statement.

The initiative comes as a significant step towards financial inclusion and economic integration in the region. By leveraging the existing digital payment infrastructure, the participating countries aim to reduce the cost and time associated with cross-border transactions. This move is expected to benefit millions of people and businesses, fostering greater economic collaboration and trade among the member countries.

The integration of UPI, PayNow, and other digital payment systems will allow users to transfer money across borders seamlessly. This means that an individual in India can send money to a recipient in Singapore in real-time, without the need for intermediaries or hefty fees. The collaboration also includes measures to ensure the security and reliability of the transactions, using advanced encryption and fraud detection technologies.

Moreover, this initiative aligns with the broader goals of the BIS to improve the efficiency of global payment systems. The BIS has been actively working on various projects to modernize and streamline payment processes, making them more accessible and user-friendly. Project Nexus is one of the flagship initiatives under this agenda, aiming to create a more connected and interoperable financial ecosystem.

The success of this project could pave the way for other countries to join the platform, further expanding its reach and impact. The BIS has indicated that they are open to including more countries in the future, as the platform matures and proves its effectiveness.

In addition to facilitating personal remittances and business transactions, the new payment platform is expected to support various government initiatives. For instance, it could be used to disburse social welfare payments, subsidies, and other financial aids more efficiently. The real-time nature of the transactions ensures that the funds reach the beneficiaries promptly, minimizing delays and administrative overheads.

The collaboration among the central banks also highlights the importance of international cooperation in addressing global financial challenges. By working together, the participating countries can share best practices, innovate jointly, and build a more resilient and inclusive financial system. This spirit of cooperation is crucial in navigating the complexities of the modern financial landscape and ensuring that the benefits of digitalization are widely shared.

Overall, the establishment of the cross-border mass payment platform marks a significant milestone in the journey towards a more integrated and efficient global financial system. It underscores the commitment of India, Malaysia, Thailand, Singapore, and the Philippines to embrace digital transformation and enhance the quality of life for their citizens through innovative financial solutions.