Quotes

The page relates only to third-party FX Providers.

For Source PSPs that provide their own FX, a different process applies. See Payment setup for PSPs who provide their own FX for details.

Quotes are generated in response to a specific quote request from a specific PSP. Each quote specifies the final exchange rate offered by a specific FXP to the Source PSP after any tier-based or PSP-based improvements have been applied.

Requesting quotes

First the Source PSP calls the GET /quotes/ API. The quote request must specify the following information:

• Source Country

• Source Currency

• Destination Country

• Destination Currency

• Amount Currency (requested by the Sender)

  • this will be either the Source Currency code or Destination Currency code

• Amount

  • If the Amount Currency is the Source Currency, this amount represents the amount transferred from the Source PSP to the FXP

  • If the Amount Currency is the Destination Currency, this amount represents the exact amount that must be credited to the Recipient's account

Both countries and currencies must be provided because it is not always the case that there is a one-to-one relationship between a country and currency. In some countries (such as Hong Kong) the IPS operates in two currencies (HKD, CNH). In addition, some currencies are used in multiple countries; EUR is used in 19 countries, but an FXP may only be present in (for example) Spain, and may be unable to provide FX for payments to Germany.

Since the Sender can request to send a specific amount in their own currency, or for the Recipient to receive a specific amount in the Recipient’s currency, the currency request must specify which currency (Sender or Recipient) the Sender used to define the amount.

Adjusting for the Source PSP's Deducted Fee

The quote request returns the Interbank Settlement Amount that must be transferred from the Source PSP to the FXP. But if the Source PSP intends to charge a Source PSP Deducted Fee, then the amount debited from the Sender’s account will differ by the amount of this fee. The Source PSP therefore needs to add or subtract this fee before showing the final amount to the Sender, as follows:

• If the Sender defined the amount they wish to send in the Source Currency, the Source PSP must subtract their intended Source PSP Deducted Fee from the Amount before submitting the quote request. This ensures that the amount credited to the Recipient is accurate after all fees have been deducted.

• If the Sender defined the Amount they wish the Recipient to receive, in the Destination Currency, Nexus will calculate the fees and tell the Source PSP how much they need to send to the FXP (in the Source Currency). The Source PSP must then add their intended Source PSP Deducted Fee to this amount in order to show the Sender what will be debited from their account.

Generation of quotes

Once Nexus receives a quote request, Nexus will:

• retrieve the list of FXPs that have a business relationship with the Source PSP, for that currency pair

• For each FXP, retrieve the base rate for the currency pair requested by the PSP, and

  • retrieve any tier-based improvements: Nexus will check whether the transaction value is higher than any of the tiers set by FXPs for that currency.

  • retrieve any PSP-based improvements: Nexus will check whether the FXP has registered a PSP-based improvement for the requesting PSP.

  • add and apply any tier- and PSP-based improvements. For each FXP, any applicable tier-based improvement is added to any applicable PSP-based improvement. Then the total improvement in basis points is applied to the base rate. (The two improvements must be added together before they are applied, so that the improvements do not compound.)

• For each quote, calculate the relevant Destination PSP (Deducted) Fee, so that the Source PSP knows exactly what will be credited to the Recipient. (See Fees.)

• Return the full list of quotes with rates that have already been improved for both tier-based and PSP-improvements. The quote response will include a FX Quote Request Id, that refers to the original request by the Source PSP

  • Every FXP-specific quote includes an FX Quote ID which is unique to the PSP's quote request. The usage of this FX Quote ID is explained below.

How quotes are used by the Source PSP

When the Source PSP receives the list of quotes it will:

• Select their preferred quote from the list of quotes provided by Nexus.

• Show the Sender exactly what will be debited from their account, exactly what will be credited to the Recipient’s account, the effective exchange rate and any fees that apply.

If the Sender approves the payment at that rate:

• The PSP will call the GET /quotes/{quoteId}/intermediaryAgents/ API operation to retrieve the relevant Financial Institution Identification of the FXP's SAPs, and the account numbers for the FXP’s accounts at those SAPs. These will be used to fill the IntermediaryAgent blocks of the pacs.008 payment instruction that the Source PSP will send to their local IPS. (See MESSAGE: pacs.008 FI to FI Customer Credit Transfer.)

• The Source PSP will add the specific FX Quote ID to the pacs.008 payment instruction (in Additional Remittance Information – see FX Quote ID, allowing Nexus to convert the payment amount from the Source Currency to the Destination Currency at the correct exchange rate.

Automatic expiry of a quote

A Sender of a payment would be shown the final exchange rate before entering the details of the Recipient. To ensure a good user experience, the Sender should be able to complete the payment setup process without being asked to agree to a new, revised exchange rate.

For this reason, FX Providers are obliged to honour a quote for at least ten minutes (600 seconds) after it is provided to a Source PSP, even if the FXP has since provided new rates.

This works as follows:

• Each quote generated by Nexus is linked to the underlying rate provided by an FXP

• Each quote has an expiry time that is initially left blank

• When the FXP submits a new rate, Nexus will

  • Set the previous rate to expire immediately

  • Find every quote that is related to the previous rate, and set the expiry time to 600 seconds from now

• When Nexus processes a pacs.008 payment instruction, it will check whether the quote expiry time is still null (blank) or in the future

  • If the expiry time is in the past, Nexus will reject the payment.

This process means that a quote from Nexus remains valid unless:

• (a) the FXP has since updated the rate and

• (b) more than 600 seconds have passed between the quote creation time (when it was sent to the Source PSP) and the point at which the pacs.008 payment instruction is received by Nexus.

If the FXP has not since updated the rate, then it will be possible to use that rate for an indefinite period. However, it would be best practice for the Source PSP to clear/reset the payment setup process after a long period of time and refresh the rates in case other FXPs have improved their rates.

The 10-minute limit is intentionally set to be long enough for most Senders to be able to complete the payment setup process without having to refresh the agreed rate. The 10-minute limit is standard across all FXPs for Nexus.

Note: The Nexus Scheme Rulebook could require FX Providers to honour quotes for a longer period of time, but this would result in them offering worse rates to allow for the greater risk of market FX rates changing before the sender completes the payment. Ten minutes is considered to be a reasonable trade-off between user experience for the Sender, and FX risk for the FXP.

WORKED EXAMPLE: Quote expiry

For simplicity, in the following example there is only one FXP and two Senders.

TIME	EVENT
00m00s	Nexus receives and saves Rate 1 from FXP-A.
01m00s	Nexus receives a quote request on behalf of Sender A. It generates a new Quote 1A.
02m00s	Nexus receives a quote request on behalf of Sender B. It generates and replies with Quote 1B.
02m01s	Nexus receives and saves a new Rate 2, from FXP-A. This overwrites Rate 1. Nexus sets all quotes based on Rate 1 to expiry 600 seconds after their creation time.
02m30s	Nexus receives a quote request on behalf of Sender C. It generates and replies with Quote 2C
09m30s	Nexus receives a payment instruction from Sender A referencing Quote 1A. Nexus checks the expiry time for Quote 1A. Since Quote 1A only expires at 11:01 (601 seconds after the quote was generated), this quote is still valid and must be honoured.
12m30s	Nexus receives another payment instruction, this time from Sender B referencing Quote 1B. Quote 1B expired at 12:01 (02:00 + 601 seconds), so this quote is no longer valid. The Source PSP must request an up-to-date quote and show this to the Sender.

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