Key concepts: IPS vs UPS
An instant payment system (IPS) in Nexus is a payment system that:
- Processes payments between accounts held at banks and/or regulated non-bank payment service providers (depending on the country)
- Processes payments instantly or within seconds (usually a maximum of 30 seconds, although some systems may take up to 90 seconds)
- Ultimately settles those payments in central bank money (either on a deferred net settlement basis, or through immediate settlement in central bank money of each individual transaction)
- In the case of IPSs that make use of deferred net settlement, there must be a robust risk management regime (such as prefunding or collateral) that eliminates any settlement risk between PSPs during the settlement cycle.
Most IPSs only operate in a single currency – for example, SGD for Singapore’s FAST instant payment system, which processes payments in SGD. However, some IPSs operate in more than one currency, for example:
- TIPS provides payments in euro (EUR) to PSPs in 19 eurozone countries, as well as payments in Swedish krona (SEK) to PSPs in Sweden.
- In Hong Kong, the Faster Payments System provides payments in Hong Kong dollar (HKD) and Chinese renminbi (CNH), to the same community of PSPs.
To accommodate these scenarios, Nexus uses the concept of a “Unique Payment System” (UPS). A unique payment system is a combination of an Instant Payment System (IPS) and a specific currency.
Each IPS-plus-currency combination is treated in Nexus as a Unique Payment System and given an ID that includes the 3-letter currency code and a 4-letter description of the payment system, eg:
- SGDFAST – Singapore’s FAST, processing payments in SGD
- EURTIPS – ECB’s Target Instant Payments Service, processing payments in EUR
- SEKTIPS – ECB’s TIPS but providing payments in SEK
- HKDHKFP – Hong Kong’s Faster Payments System processing payments in HKD
- CNHHKFP – HK’s FPS processing payments in CNH
- MYRRPPX – Malaysia’s real-time payments platform, processing payments in MYR