The Bangko Sentral ng Pilipinas (BSP) anticipates a significant reduction in the costs associated with cross-border digital retail payments, aiming to bring fees on remittances down from the current five percent to a mere one percent.
BSP Governor Eli M. Remolona Jr., currently in San Francisco, California, for a Philippine Economic Briefing, outlined the global Nexus Project initiated by the Bank for International Settlements (BIS), which aims to progressively cut fees on wire transfers or payment transfers.
“It costs about 5% now to send money to the Philippines when it comes to retail payments. We want to bring it down to 3% and eventually bring it down to 1%,” he explained.
The Nexus Project, a prototype developed by the BIS Innovation Hub Singapore Centre in collaboration with the central banks of Italy, Malaysia, and Singapore, facilitates connectivity between payment system operators and various instant payment systems, including the Eurosystem’s TARGET Instant Payment Settlement (TIPS), Malaysia’s Real-time Retail Payments Platform (RPP), and Singapore’s Fast and Secure Transfers (FAST).
Collaborating with central banks in the ASEAN region, including Singapore, Malaysia, Indonesia, and Thailand, the BSP is set to integrate their domestic instant payment systems (IPS) into the Nexus system.
“We’re now working with our ASEAN partners to develop the Nexus payment system, which should be digital and interoperable,” noted Remolona, who has a 20-year history with the BIS in Basel, Switzerland, and Hong Kong.
The second phase of the Nexus is expected to enable central banks in the region to establish multilateral connectivity for fast payment systems, fostering cross-border real-time retail payments that contribute to financial integration within the region.
The collaboration involves the Bank of Italy, the Central Bank of Malaysia , the Monetary Authority of Singapore, and payment systems operators PayNet and Banking Computer Services.