Instant Mobile Transfers from Singapore to Four Countries: A Breakthrough in Cross-Border Payments

A groundbreaking payment system is set to revolutionize how Singaporeans send money to four key Asian countries—India, Malaysia, Thailand, and the Philippines — using their mobile phones. This innovative system, known as the Nexus Scheme, promises to simplify and expedite cross-border transactions, making them faster, cheaper, and more secure.

Singapore’s journey towards efficient cross-border payments began with traditional methods, where transactions were often slow, costly, and cumbersome. Over the years, the Monetary Authority of Singapore (MAS) and various financial institutions have been at the forefront of pioneering solutions to address these challenges.

One notable milestone was the introduction of PayNow in 2017, which revolutionized domestic peer-to-peer transfers by enabling instant payments using just mobile numbers or National Registration Identity Card (NRIC) numbers.

Building on the success of PayNow, Singapore has progressively extended its capabilities to the international arena. In recent years, Singapore has established several bilateral real-time payment linkages with neighboring countries to facilitate instant cross-border transactions. Notable among these are the PayNow-PromptPay linkage with Thailand and the PayNow-UPI (Unified Payments Interface) connection with India. These initiatives marked significant strides in simplifying and accelerating cross-border payments.

The PayNow-PromptPay linkage, launched in 2021, allows users in Singapore and Thailand to transfer funds directly using mobile numbers. Similarly, the PayNow-UPI connection with India, initiated in 2022, leverages India’s robust UPI infrastructure to enable real-time fund transfers between the two countries.

Despite these advancements, the existing systems operated as separate entities, each requiring custom connections and specific protocols. While effective, these bilateral systems highlighted the need for a more integrated approach to cross-border payments, one that could standardize and simplify the process across multiple countries.

The Nexus Scheme Organisation (NSO)

The Nexus Scheme Organisation (NSO) represents a groundbreaking development in the realm of cross-border payments. Established under the guidance of the Bank for International Settlements (BIS), the NSO brings together central banks and payment service providers from Singapore, India, Malaysia, Thailand, and the Philippines. This collaborative effort aims to create a unified infrastructure that revolutionizes how cross-border money transfers are conducted, making them faster, cheaper, and more secure.

The success of the NSO is anchored in the collaboration of several key stakeholders, each playing a pivotal role in its development and operation:

• Bank for International Settlements (BIS): As the spearheading entity, BIS provides overarching guidance and coordination. It ensures that the project adheres to international standards and facilitates cooperation among the participating central banks.
• Central Banks: The central banks of Singapore, India, Malaysia, Thailand, and the Philippines are integral to the NSO. They provide regulatory oversight, ensure compliance with anti-money laundering and counter-terrorism financing regulations, and contribute to the governance framework of the scheme.
• Instant Payment Service Providers: These include platforms like PayNow, UPI, and PromptPay, which are responsible for the technical implementation and operational management of the instant payment services. They work to integrate their domestic systems with the Nexus infrastructure, ensuring seamless and efficient cross-border transactions.
• Technology Partners: Various technology firms and fintech companies contribute to the development and maintenance of the Nexus infrastructure. Their expertise in payment technology and cybersecurity is crucial to the system’s robustness and security.

Objectives

The NSO is driven by a clear set of objectives aimed at transforming the landscape of cross-border payments:

• One of the primary goals of the NSO is to standardize the connection protocols among domestic instant payment service providers.
• The NSO seeks to make cross-border money transfers as quick and seamless as domestic transactions, enhancing convenience and reducing wait times.
• By streamlining the payment process and reducing the reliance on intermediaries, the NSO aims to lower the costs associated with cross-border transactions.
• The organization is committed to implementing robust security measures and maintaining strict adherence to anti-money laundering and counter-terrorism financing standards.
• While the initial focus is on connecting Singapore with India, Malaysia, Thailand, and the Philippines, the NSO envisions expanding its network to include additional countries. region and beyond.

How the Nexus System works

The Nexus System is designed to simplify and expedite cross-border money transfers. At its core, Nexus standardizes the way domestic instant payment services connect, creating a unified and seamless infrastructure. Unlike traditional systems that require multiple, often complex, custom connections for each country, Nexus offers a single integration point for all participating nations.

The technology behind Nexus leverages advanced digital payment protocols and secure communication channels to ensure real-time processing of transactions. The infrastructure is built on a robust platform that can handle high volumes of transactions simultaneously, ensuring reliability and efficiency. The system incorporates cutting-edge encryption and fraud detection mechanisms to safeguard user data and financial information.

Making an instant cross-border transfer using the Nexus System is straightforward and user-friendly. Here’s a step-by-step overview of the process:

• The user opens their preferred local payment app, and selects the option for a cross-border transfer.
• The user enters the recipient’s details, which can be as simple as a mobile number or a unique payment identifier.
• The user specifies the amount to be transferred and the desired currency. The system automatically handles currency conversion at competitive rates.
• To ensure security, the user might need to verify their identity or authenticate the transaction using methods like biometrics or one-time passwords (OTP).
• Once verified, the Nexus System processes the transaction in real-time. The money is transferred through the unified Nexus infrastructure, ensuring it reaches the recipient’s account instantly.
• Both the sender and the recipient receive immediate confirmation of the transaction, complete with details of the transfer.

Comparison with existing systems (e.g., PayNow-PromptPay, PayNow-UPI)

While existing systems like PayNow-PromptPay and PayNow-UPI have made significant strides in improving cross-border payments, they operate as bilateral linkages between specific countries. For instance, PayNow-PromptPay facilitates transfers between Singapore and Thailand, while PayNow-UPI connects Singapore and India. Each of these systems requires custom connections and protocols unique to the countries involved.

In contrast, the Nexus System offers a more integrated approach by creating a standardized platform that can connect multiple countries through a single interface. This not only simplifies the technical integration for service providers but also enhances the user experience by providing a consistent and unified process for all cross-border transactions.

Moreover, Nexus is designed to be scalable, allowing for the inclusion of additional countries without the need for separate bilateral agreements. This scalability positions Nexus as a pioneering solution in the realm of international payments, capable of expanding its reach and impact far beyond the initial participating nations.

Future prospects

The Nexus payment system has made significant strides, with industry sources suggesting successful completion of initial testing phases. While the Monetary Authority of Singapore has not announced an official launch date, insiders hint at a potential rollout in late 2024, starting with a phased approach involving Singapore, India, Indonesia, Malaysia, and Thailand.

Nexus’s scalable architecture positions it for expansion beyond these initial countries, with interest reportedly coming from other Asian nations and even European and North American financial hubs. However, regulatory challenges and data privacy concerns remain hurdles to overcome. As the financial world eagerly anticipates Nexus’s debut, its success will hinge on navigating these complex issues while delivering on its promise of fast, convenient cross-border transactions.

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