Step 3: Account Validation
Nexus communicates with the Destination IPS and Destination Bank to validate the account
Before executing the payment, the Destination Account needs to be validated to ensure that (a) the account details or alias provided by the Sender are correct and (b) the Destination Bank and Recipient’s account can accept Nexus payments.
Validation follows these steps:
- 1.The Sender inputs the account details or alias of the Recipient via the Source Bank’s app (1).
- 2.The Source Bank checks that the account number or alias is in the correct format, based on the information provided in the Destination SLD. This requires a simple “regex” validation which can be done within the app and does not require communication with Nexus.
- 3.Source Bank calls the Source Gateway’s Account API (2):
- 4.The Source Gateway forwards the request to the Destination Gateway (3)
- 5.The Destination Gateway performs the following steps:
- (Essential) If an alias is used, map the alias to a primary account number. Depending on the local configuration, this will be via a request to the Destination IPS (4) or a request directly to the local addressing service (not shown above). The IPS in turn may need to communicate with the Destination Bank (5). (For example, Australia has a dedicated directory, the Addressing Service which can be queried, whereas India’s UPI ID identifies a specific Payment Service Provider and that PSP must be queried directly to retrieve the account details.)
- (Essential) Check that the Destination Bank is “reachable” ie capable of receiving Nexus payments. Not all banks in a country will have made the necessary changes required to accept cross-border payments through Nexus. The list of reachable banks is defined in the Destination IPS’s SLD.
- (Optional) Ask the IPS whether the Destination Bank is “available’ (4). Banks may temporarily be unable to accept payments due to scheduled downtime (eg for planned maintenance) or unscheduled downtime (eg operational incidents). Not all IPSs or banks are able to provide this information, so this step is optional.
- (Essential) Checks whether the FX Provider has blacklisted the Destination Bank. (There is no need to check the Source Bank against the blacklist at this stage since this check is done during the Request Quote stage, ensuring that any bank on an FX Provider’s blacklist is not offered quotes from that FX Provider.)
- (Optional) Ask the Destination Bank whether the Destination Account is active (5) This is to ensure the account is not closed or frozen. Not all banks will be able to provide this information at this point, so this step is optional but recommended. (If the account is closed or frozen, the payment will fail at the Payment Instruction stage. Identifying whether the account is active at this stage saves a more complicated reversal of the payment after the payment instruction has been sent.)
- Establish any fees charged to the Recipient (5). The Destination Bank may want to charge a fee to process the payment. Nexus scheme rules would require that any fees charged to the Recipient would be charged as separate line items rather than deductions from the payment amount (this makes it easier for the Recipient to reconcile payments received with invoices expected, as well as making the cost of receiving cross-border payments more transparent.
- (Optionally) Inform the FX Provider of the value of this potential payment (6). FX Providers can request to be informed of the value of payments that reach the account validation stage, as this gives an indication of the likely liquidity they need in the next few minutes. FX Providers can register a webhook to receive updates at this point.
If all the checks above passed, this confirms that it is technically possible to credit the Destination Account. Nexus will now return the following information to the Source Bank:
- Account Number & Bank Identifier (as per local addressing formats)
- Account Status. This will include an error code if the account cannot be credited. (Reasons for account validation failures are given below.)