The launch of Project Nexus in 2026, linking Singapore's PayNow to Indonesia, Malaysia, Philippines, and Thailand, is set to reduce B2B cross-border payment costs and settlement times for Singapore SMEs, directly improving cash conversion cycles.
The Cross-Border B2B Payment Challenge for SMEs
For small and medium-sized enterprises in Singapore, the mechanics of paying overseas suppliers remain a structural drag on working capital. Traditional cross-border payments depend on central bank real-time gross settlement (RTGS) systems, which typically operate only during local business hours. A payment instruction submitted late on a Friday may sit idle until the next working day, with settlement delayed by up to several days. In an environment where domestic instant payment systems (IPS) already clear transactions in seconds at near-zero cost, such delays represent a competitive disadvantage for SMEs engaged in cross-border trade.
The cost structure compounds the problem. Correspondent banking arrangements impose significant fees per transaction, and these costs scale with the number of intermediary banks in the payment chain. SMEs, lacking the negotiating power of large corporates, are particularly exposed. As Ma-an David, domestic payables lead for global payments solutions in Asia Pacific at HSBC, noted: "As a corporate, you don't want to be opening accounts everywhere in all the corridors you need to do transactions with." Yet that is precisely the operational burden that many SMEs currently face—maintaining multiple bank accounts across different countries to manage supplier payments, with each account incurring maintenance fees and reconciliation overhead.
Bilateral linkages between domestic IPS offer a partial solution, but their economics are challenging. According to the BIS Innovation Hub's Project Nexus proof-of-concept report, each bilateral link requires complex legal negotiations between payment system operators, central banks, banking associations, and individual banks. This investment is only commercially viable for high-volume corridors—typically those serving large remittance flows or close trading partners. For smaller trade routes, the cost-benefit calculus leaves them perpetually underserved.
How Project Nexus Eliminates Bottlenecks
Project Nexus addresses these structural inefficiencies through a multilateral connector architecture. Rather than requiring a payment system operator to build custom bilateral integrations for each new country, Nexus standardises connections via common application programming interfaces (APIs) and ISO 20022 messaging protocols. An IPS operator makes a single connection to the Nexus platform; that single connection provides access to every other country on the network. This eliminates the need for operators to negotiate and maintain multiple separate bilateral links.
Exhibit
Number of Corridor Connections Required: Bilateral vs. Nexus Model for ASEAN-5
A single Nexus connection replaces ten bilateral links, scaling linearly with additional countries.
The operational impact is significant. End-to-end settlement can occur in under 60 seconds, even when the underlying domestic systems use deferred net settlement (DNS) models rather than real-time settlement. Critically, Nexus does not require changes to domestic clearing and settlement processes. As the BIS Innovation Hub's technical documentation explains, Nexus acts as the coordinator of two separate but related instant payments across two separate IPS, without the need to modify how either system processes domestic transactions. The IPS does not need to be aware of any foreign currency involved, nor does it need to coordinate settlement timing across jurisdictions.
A proof-of-concept completed in 2022 successfully linked the Eurosystem's TIPS, Malaysia's FPX, and Singapore's PayNow. The project was subsequently extended to include Indonesia, Malaysia, the Philippines, Singapore, and Thailand, demonstrating operational feasibility across five jurisdictions with different regulatory, technical, and currency frameworks.
Quantified Impact on Singapore SME Working Capital
The cost advantages stem directly from the characteristics of domestic IPS. Domestic IPS transactions are typically free or near-free to end users, reflecting the very low cost base of these systems. The BIS Innovation Hub observed that IPS "tend to be very cost-efficient for domestic payments," noting that this sets a low-cost basis for cross-border payments routed through linked IPS. While cross-border payments incur additional compliance and foreign-exchange costs, the marginal cost of routing via Nexus is dramatically lower than correspondent banking alternatives.
For Singapore SMEs, near-instant settlement directly shortens the cash conversion cycle—the time between when a business pays its suppliers and when it receives payment from its own customers. Reducing settlement from several days to under 60 seconds eliminates the working capital gap created by payment float. The elimination of multiple correspondent banking relationships further reduces operational overhead and administrative friction. As HSBC's Ma-an David noted, the BIS-led movement to interconnect real-time payment infrastructures multilaterally is "making investments more efficient" for businesses that previously needed fragmented account structures.
The platform is not limited to business-to-business payments. Nexus supports business-to-person, person-to-business, and person-to-person use cases as well, making it a universal platform for SME payment needs. The BIS Innovation Hub's blueprint explicitly identifies micro, small, and medium-sized businesses as key beneficiaries, enabling them to send payments to suppliers or employees in other countries without the operational burden of managing multiple cross-border banking relationships.
Go-Live and Governance of the Nexus Scheme
Project Nexus is expected to go live in 2026, according to The Asian Banker. The five central bank partners—Bank Indonesia, Bank Negara Malaysia, Bangko Sentral ng Pilipinas, the Monetary Authority of Singapore, and the Bank of Thailand—have agreed to establish a permanent governance body, the Nexus Scheme Organisation (NSO), which will be based in Singapore. The NSO will manage the project in its live implementation stages, overseeing technical standards, operational rules, dispute resolution, and the admission of new participants.
As the first five countries go live, the immediate benefit for Singapore SMEs will be access to instant, low-cost settlement corridors covering Malaysia, Indonesia, Thailand, and the Philippines—all significant trade partners. The underlying architecture, however, is designed for scalability. The BIS Innovation Hub has already consulted with central banks, standard-setting bodies, and commercial banks from jurisdictions beyond the initial five, validating that the Nexus model is interoperable with IPS in other regions. As additional countries join the network, Singapore SMEs will gain seamless, low-cost access to a growing number of trade corridors, progressively reducing cross-border payment friction and unlocking working capital efficiencies across a widening set of markets.