Project Nexus and UPI Global Integration

• Project Nexus is an initiative of the Bank for International Settlements Innovation Hub (BISIH), Singapore Centre.

• Objective: To enable instant cross-border retail payments by interlinking domestic Fast Payment Systems (FPS) or Instant Payment Systems (IPS).

• It is the first BIS Innovation Hub project in the payments domain to move towards live implementation.

• Nexus adopts a “single connection model” where domestic IPS connects once to the Nexus platform to access all other systems in the network.

• Project Nexus aligns with the G20 Roadmap for Enhancing Cross-border Payments (2020).

B. Participating Countries and Institutions

Founding Central Banks (Agreement Signed on 30 June 2024, Basel):

1. Reserve Bank of India (RBI)

2. Bank Negara Malaysia (BNM)

3. Bangko Sentral ng Pilipinas (BSP)

4. Monetary Authority of Singapore (MAS)

5. Bank of Thailand (BOT)

Special Observer:

• Bank Indonesia (BI) – Participated in earlier phases; continues in observer capacity

Coordinating Body:

• Bank for International Settlements (BIS) – Plays technical advisory role; does not operate the platform

C. Nexus Scheme Organisation (NSO)

• Proposed entity to manage Project Nexus operations and governance

• Will be wholly owned by central banks or IPS operators of participating countries

• Responsible for managing the scheme rulebook, interoperability protocols, and participant expansion

D. Timeline of Development

• Phase 1 & 2 (2022–2023): Development of prototype using test systems like:

  • TARGET Instant Payment Settlement (TIPS) – Eurosystem

  • RPP – Malaysia

  • FAST – Singapore

• Phase 3 (Completed by July 2024): Comprehensive blueprint, technical guidelines, governance, commercial model

• Phase 4 (2024–2026): Implementation and onboarding of live payment systems

E. Features and Technical Specifications

• Uses ISO 20022 messaging standard for payment data exchange

• Incorporates a unified rulebook and governance framework

• Expected cross-border transaction time: under 60 seconds

• Reduces need for bilateral connections between each country’s FPS

• Designed to be scalable and interoperable globally

F. India and UPI’s Role

• Unified Payments Interface (UPI) is India’s domestic Fast Payment System operated by NPCI

• UPI processed ~118 billion transactions in 2023; ~12 billion/month average

• UPI is the world’s largest real-time payment system

• RBI has joined Nexus to multilaterally expand UPI’s reach

• Part of India’s effort to internationalize UPI in line with Viksit Bharat 2047 vision

G. Bilateral UPI Initiatives (Before Nexus)

• India-Singapore UPI-PayNow Linkage: Launched February 2023

• India-Mauritius UPI and RuPay Linkage: Operational from February 2024

• India-UAE MoU (July 2023): To interlink payment infrastructures

• UPI payment acceptance active in France, Bhutan, Nepal, UAE, among others

H. G20 and Global Context

• Project Nexus supports G20’s priority of faster, cheaper, more transparent cross-border payments

• BIS Innovation Hub is a key implementing partner in the G20 Cross-border Payments Roadmap (2020)

• Average global remittance cost for $200: 6.2% (World Bank); Project Nexus aims to reduce this

I. Economic Survey 2023–24 Highlights

• Project Nexus will accelerate UPI’s global expansion

• RBI aims to expand UPI to 20 countries by FY29

• Nexus expected to serve 1.7 billion people in its initial phase

J. Prelims-Oriented Keywords and Schemes

K. Potential MCQ Areas for UPSC Prelims

1. First BIS project moving to live implementation in payments domain → Project Nexus

2. Country not among founding members of Nexus → Indonesia (observer only)

3. Messaging standard used in Nexus → ISO 20022

4. Entity proposed to manage Nexus platform → Nexus Scheme Organisation (NSO)

5. Partner country in UPI bilateral linkage launched in 2024 → Mauritius