ASEAN cross-border remittance service to go live by 2026 – BSP

March 7, 2024 | 12:00am

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) along with other central banks in the region aims to operationalize multilateral cross-border fund transfers by July 2026.

“Our target ready-for-service date is sometime in July 2026,” BSP Deputy Governor Mamerto Tangonan said in a press conference.

Once the Nexus project is operational, BSP Governor Eli Remolona Jr. said remittances sent to the Philippines would be faster and cheaper compared to going through traditional institutions such as correspondent banks.

“The money from the dollars can be changed into Pesos and back into Ringgit within the platform. To me, it’s a very promising platform for cross-border payments,” Remolona said.

The central bank is looking to implement cross-border payment connectivity in the next two years, along with its Association of Southeast Asian Nations (ASEAN) peers.

The BSP and four other central banks in the region plan to connect their domestic instant payment systems (IPS) through the Bank for International Settlements’ (BIS) Nexus project.

The Nexus, a prototype developed by the BIS Innovation Hub Singapore Centre, connects payment system operators with the Eurosystem’s TARGET Instant Payment Settlement, Malaysia’s Real-time Retail Payments Platform as well as Singapore’s Fast and Secure Transfers.

“The nice thing about this platform is it’s completely scalable. It’s decidedly scalable from the beginning so that anybody else who has a fast payment system can just attach themselves to this platform,” Remolona said.

The BSP chief said more overseas Filipinos would be able to send money home using the platform if the US and Europe joins the Nexus project.

Meanwhile, Tangonan said central banks in the Nexus project are targeting to implement fees that are less than three percent of the transaction value.

“That’s been our ceiling in our cost-determination,” he said. “We’re happy to say that so far the cost is very-well within that limit.”

Based on data from the central bank, cash remittances coursed through banks grew by 2.9 percent to $33.5 billion in 2023 from $32.5 billion in 2022.

The US was the biggest source of remittances last year, accounting for 40.9 percent of the overall remittances, followed by Singapore with 7.1 percent and Saudi Arabia with 6.2 percent.

In November 2022, the BSP signed a memorandum of understanding with other central banks in the ASEAN region to strengthen collaboration on regional payment connectivity (RPC).

The RPC is expected to contribute to accelerating economic recovery and promoting growth as it aims to foster a more inclusive financial ecosystem by enabling fast, seamless, and cheaper cross-border payments across the region.

The cooperation will include a number of modalities, including quick response code and fast payments.