What is RBI’s Project Nexus which is set to bring a paradigm shift in instant cross border payments?

For quite some time now, the Reserve Bank of India (RBI) has been collaborating with various countries to link Unified Payments Interface (UPI) with the respective fast payment systems (FPSs) of other countries.

Since this multilateral approach is likely to give impetus to expanding the international reach of Indian payment systems, RBI has joined the Project Nexus, which is a multilateral international initiative to enable instant cross-border retail payments by interlinking domestic FPSs.

Conceptualised by the Innovation Hub of the Bank for International Settlements (BIS), it aims to connect the FPSs of four ASEAN countries (Malaysia, Philippines, Singapore, and Thailand); and India. These five countries will be the founding members and first mover countries of this platform.

A written agreement was signed by the BIS and the central banks of the founding countries i.e., Bank Negara Malaysia (BNM), Bank of Thailand (BOT), Bangko Sentral ng Pilipinas (BSP), Monetary Authority of Singapore (MAS), and Reserve Bank of India on June 30, 2024, in Basel, Switzerland.

At the same time, Indonesia—involved since the beginning — continues to be involved as a special observer.

The platform can be extended to more countries in the coming time. The platform is likely to go live in two years i.e. 2026. Once functional, Nexus will play an important role in making retail cross-border payments efficient, faster, and more cost effective.

Meanwhile, RBI and NPCI International Payments (NIPL) are working on a plan to extend the UPI to 20 countries by FY29. According to the RBI Annual Report, efforts will be made to expand the global presence of UPI and RuPay.

“In light of goals for Viksit Bharat 2047, the Reserve Bank, along with NIPL will work towards taking UPI to 20 countries with initiation timeline of 2024-25 and completion timeline of 2028-29,” the report said.

The RBI and the Central Bank of the UAE (CBUAE) signed an MoU in July 2023 to link their payment infrastructures.

In February 2024, RuPay cards and UPI connectivity between India and Mauritius was launched. This enables Indian tourists in Mauritius to make payments to merchants using UPI apps and vice versa for Mauritian travellers in India.

In another news, RBI recently announced the introduction of auto-replenishment of UPI Lite wallet, under its e-mandate framework.