The Nexus international payments platform: Is it business-model viable?

This paper examines the BIS Technology Hub's Nexus project. Nexus is a proof-of-concept for a messaging platform that supports near real-time international payments by linking together domestic ‘instant’ payment platforms. Two aspects of Nexus are distinguished: (1) the innovations in technology and messaging standards to support instant payment services internationally, deal with anti-money laundering and sanctions compliance, and support transparency of foreign exchange pricing and payments charges; and (2) its novel organisational architecture with two associated new business models for the execution of international payments. As the paper will discuss, it is unclear whether these new business models will be commercially viable. Likewise, the extent to which the improvement of international payments must be based on new operational architectures rather than the enhancement of existing correspondent banking-based arrangements remains uncertain. The paper therefore argues that these aspects should be developed separately, so that banks and payment services providers are free to use Nexus messaging in conjunction with their existing bilateral commercial and operational relationships to support the linkage of domestic instant payment platforms, as well as to use the Nexus platform itself, if and when it achieves a commercial launch.