The Philippines Central Bank (BSP) is preparing to launch instant cross-border payments capabilities through Project Nexus. This initiative involves collaboration with Malaysia and Japan, aiming to link their existing instant payment systems. The project also holds a longer-term vision of establishing a broader multilateral network.

Mamerto Tangonan, Deputy Governor of the Bangko Sentral ng Pilipinas (BSP), stated that Filipino merchants will soon be able to accept payments from Malaysian tourists and residents, and vice versa.

“We have an instant payment system existing as far back as 2018,” he said via Zoom. “All we need to do here, technology wise, is just to connect it with other payment systems via a hub,” Tangonan said.

The ultimate goal is a single network offering access to multiple jurisdictions. However, Tangonan highlighted the complexities arising from differing national anti-money laundering regulations.

The Philippines was recently removed from the Financial Action Task Force’s increased monitoring list for money laundering risks. This development is considered a positive step.

Harmonising these regulations requires considerable effort to ensure the integrity of each transaction. The adoption of ISO 20022, the global standard for electronic data exchange between banks, is facilitating this process.

The Philippines is actively participating in Project Nexus, a Bank for International Settlements (BIS) Innovation Hub initiative focused on standardising the interconnection of instant payment systems. This project seeks to make international transactions faster, cheaper, and more accessible globally.

Several Asian central banks, including those in Singapore, Thailand, Malaysia, and India, are in the final stages of bringing Project Nexus to fruition.

Tangonan believes Nexus will particularly benefit rural banks and non-bank e-money issuers. Their clients include families of overseas Filipino workers who regularly send remittances.

He anticipates broadened access to cross-border payments with lower costs, higher speeds, and greater transparency, allowing beneficiaries to receive funds directly into their accounts, even with rural banks.

By 2027, Filipinos travelling to Singapore will have the convenience of paying using Singapore’s PayNow QR code. Similarly, tourists visiting the Philippines will be able to utilise local PH QR codes for payments.

Tangonan stated confidently that cross-border payment costs under Project Nexus will be significantly lower than the rates endorsed by G20 nations. He further assured that the system will credit payments within a swift timeframe of five minutes.

“You can have your laksa from a hawker centre. For tourists going to Boracay, they can buy taho (sweet tofu pudding) by just scanning the PH QR code of the taho vendor,” Tangonan said.

Featured image credit: Edited from Freepik.