BSP Aiming to Launch Instant Cross-Border Payment Service by 2026

BSP Aiming to Launch Instant Cross-Border Payment Service by 2026

by March 7, 2024

The Bangko Sentral ng Pilipinas (BSP) has outlined plans to introduce an instant cross-border payment service by 2026, aiming to simplify the process of sending remittances to the Philippines.

Eli Remolona

Eli M. Remolona, Jr

BSP Governor Eli M. Remolona, Jr. highlighted this initiative during a news briefing, suggesting it could reduce the cost of remittances significantly.

The move is part of the central bank’s broader strategy to promote financial inclusivity and the adoption of digital payments, which it believes could aid the country’s economic recovery.

Despite a modest increase in remittances from overseas Filipino workers, which grew by 2.9% last year to $33.491 billion, this growth was below the BSP’s expectations and slower than the previous year’s expansion.

The proposed cross-border system is designed to facilitate the conversion of currencies such as US dollars to pesos outside the traditional banking framework, as explained by Governor Remolona.

Mamerto E. Tangonan

Mamerto E. Tangonan

Deputy Governor Mamerto E. Tangonan of the BSP indicated that the cross-border payment service is expected to be operational by July 2026.

This initiative has been reinforced by an agreement signed last year between the BSP and other central banks within the Association of Southeast Asian Nations (ASEAN), aiming to connect their domestic instant payment systems through the Bank for International Settlements’ (BIS) Project Nexus. The ASEAN Nexus platform intends to link local instant payment systems to provide cost-effective remittance services across the region.

The Nexus platform, developed by the BIS Innovation Hub Singapore Centre, will connect various payment system operators, including those from the Eurosystem’s TARGET Instant Payment Settlement and Singapore’s Fast and Secure Transfers, among others. According to Governor Remolona, this platform is designed to be scalable, allowing for the easy addition of new participants with real-time payment systems.

Transaction fees for account-to-account transfers through this new platform could amount to up to 3% of the transaction value, as mentioned by Deputy Governor Tangonan. The initiative follows a memorandum of understanding signed in 2022 by ASEAN central banks to enhance regional payment connectivity, reflecting a commitment to improving financial technology and inclusivity across the region.

Featured image credit: Edited from Freepik