BIS Innovation Hub test cross-border payment network: What does this mean for blockchain companies like Ripple?

The Bank for International Settlements (BIS) Innovation Hub Singapore Centre has successfully developed a network called Nexus, which connects multiple domestic instant payment systems (IPS) to enhance cross-border payments.

Nexus allows payments to be sent across three countries using only mobile phone numbers, and the BIS Innovation Hub is now working towards connecting the IPS of Indonesia, the Philippines, Malaysia, Singapore and Thailand.

Nexus uses a “distributed network model”, where each IPS would install and run a software application called the Nexus Gateway. The network would use the ISO 20022 messaging standard.

The project has been carried out in collaboration with the Bank of Italy, the Central Bank of Malaysia (BNM), and the Monetary Authority of Singapore (MAS), as well as payment systems operators PayNet and Banking Computer Services (BCS).

The success of the initial experiment paves the way for the BIS Innovation Hub Singapore Centre to explore the practical applications of a distributed multilateral network.

The BIS press release notes that Nexus could eventually be implemented globally, and to achieve this, they aim to establish a Global Advisory Panel of central banks and payment system operators to advise on the project’s development beyond the Southeast Asian region.

Cecilia Skingsley, Head of the BIS Innovation Hub, said, “I am thrilled at our success in connecting three national payment systems and the potential this indicates for Nexus. It paves the way for further development, and we look forward to collaborating with our partner central banks on the next phase of the project.”

Is Nexus direct competitor for crypto companies focused on cross-border payments, such as Ripple?

Nexus and blockchain companies like Ripple both address the problem of improving cross-border payments.

Ripple aims to reduce the cost and time of cross-border payments by creating a decentralized network that allows banks and financial institutions to transfer funds directly without intermediaries, and escrow accounts. Specifically, Ripple’s On-Demand Liquidity (ODL) uses the digital asset XRP to settle cross-border payments, without the need for expensive pre-funding.

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Nexus connects domestic instant payment systems (ISPs) across different countries. Its goal is also to standardize and interlink different payment systems, making cross-border payments faster, cheaper, and more transparent.

It also aims to eliminate expensive pre-funding for banks and other financial institutions. In its report, the BIS Innovation Hub notes:

Read the full report on Nexus here and let us know what your think.