KUALA LUMPUR, March 30 (NNN-Bernama) — Malaysia, together with four ASEAN countries will participate in the next phase of multilateral cross-border payment connectivity known as Project Nexus, said Bank Negara Malaysia (BNM).
According to the BNM’s Annual Report 2022 released Thursday, it aims to translate the current Nexus solution into an operationally and commercially viable model by 2025.
As such, the central bank has signed a memorandum of understanding on regional payment connectivity with the central banks of Indonesia, the Philippines, Singapore and Thailand during the G20 Summit in Bali in November 2022.
“This project has tremendous potential for the region. Consumers will be able to enjoy cheaper, faster and more transparent payment and fund transfers among the participating countries in the future.
“It can also strengthen intra-regional trade and economic cooperation, and spur greater innovation in the payments space,” said the central bank.
The Project Nexus experiment, which was completed in December 2022, demonstrated that a multilateral model for connecting instant payment systems (IPSs) is technically feasible.
“During the experiment, cross-border payments were successfully credited into a beneficiary’s account within 60 seconds,” it said.
The successful Nexus solution included a test model (or Nexus gateway) and draft participant rules (or Nexus scheme), said the report.
It said the gateway acts as a central platform for IPSs to connect to and manage instant cross-border payments and fund transfers, and payment-related processes such as payment messaging, currency conversion, and compliance screening.
Meanwhile, the scheme outlines the roles and responsibilities of all participants in the Nexus solution, including the IPS operators and payment service providers.
However, the report said despite the experiment showing that the Nexus solution is technically feasible, there are other factors that need to be considered before it could be implemented in the real world.
Among other factors to be considered was the governance arrangement for the entity that would eventually manage and operate the Nexus solution, it said.
Previously, Malaysia had rolled out IPS in December 2018 and it led to easier transaction of domestic retail payments or sending money domestically within Malaysia.
However, making payments overseas and sending money to another country remains a hassle. Thus, the bank has been working on linking local IPS with other IPSs in several neighbouring countries to mimic the benefits currently enjoyed domestically in the cross-border payment space.
To date, Malaysia has established bilateral cross-border payment linkages for QR payments with Thailand, Indonesia and Singapore.