RBI to join Southeast Asia's cross-border payments platform: India's UPI awakens

The central banks of Singapore, Malaysia, the Philippines and Thailand, in partnership with the Bank for International Settlements (BIS), announced on 1 July the completion of the third phase of a regional cross-border settlement network project, known as Project Nexus, according to Singapore's Lianhe Zaobao newspaper. The next phase, which will be joined by India's central bank, as well as Indonesia's central bank, will connect a market for fast cross-border payments covering more than 170 million people.

The Monetary Authority of Singapore, the central banks of Malaysia, the Philippines and Thailand, and the BIS, issued a joint statement noting that the Nexus project aims to create a unified approach to connecting the instant payment systems of participating countries. Operators connected to Nexus will be able to connect all partner countries. This programme is expected to be implemented in 2026.

The news has attracted a lot of attention in the Indian media. The Indian Express reported on 2 July that the project meant that India's Unified Payments Interface (UPI) would be interconnected with payment systems in Malaysia, the Philippines, Singapore and Thailand. Going forward, the platform could be expanded to more countries.

As previously reported by Al Jazeera, India has been aggressively promoting the global adoption of its e-payment methods. UPI, a "digital public infrastructure" designed by India's National Payments Corporation, integrates with more than 300 banks and offers its services through more than 60 apps, including Google and Amazon. . With the potential of 140 million domestic users, UPI is expected to become an alternative to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) by joining international partners.

The trend of cross-border payment integration in Southeast Asia has also attracted Japanese companies. According to the Nikkei Asian Review, Japan and ASEAN countries plan to achieve borderless QR code payments by fiscal year 2025. One of the aims is to strengthen Japan's influence in Southeast Asia to balance out countries such as China, the report noted. Japan's Ministry of Economy, Trade and Industry (METI) is said to have held discussions with the governments and central banks of several ASEAN countries.

The ASEAN countries previously lacked a unified cross-border settlement system, which limited the further development of economic and trade relations between them, Pan Helin, a member of the Ministry of Industry and Information Technology (MIIT)'s Expert Advisory Committee on Information and Communication Economy (EACIE), told the Global Times on 3 July. Cross-border payment cooperation between the Southeast Asian countries, India and Japan has benefited all parties and boosted regional trade. At the same time, due to the existence of numerous payment applications in Southeast Asia, Japan and India would like to strengthen their economic ties with the region by participating in or even leading the establishment of a unified cross-border payment system standard. Given the close economic ties between China and ASEAN, the two sides could also deepen their cooperation in the area of cross-border payment systems in the future.