Participants in the Nexus Network

Multiple participants are involved in a cross-border payment through Nexus. Some of these participants play more than one role.
This chapter describes the main types of participant and the roles they play at a high level. Each participant’s roles and responsibilities are described in more detail in later sections.
Terminology: Source and Destination
The Source country is the country where the payment is initiated, and the Destination country is the country that the payment is going to.
Relationships between Participants
The following diagram shows the messaging, account and accounting relationships between participants.
Instant Payment System (IPS)
An Instant Payment System (IPS), processes payments between bank accounts with seconds, with the funds becoming available to the recipient immediately. They run on a 24/7/365 basis (with potentially minor interruptions for maintenance). They are often known as “fast” or “real-time” payment systems.
Sender & Recipient
Senders and Recipients can be anyone who can make or receive domestic instant payments through the local IPS scheme. This can include individuals and businesses but would exclude very large corporates or financial institutions making payments to each other.
Nexus Gateway
Each IPS would operate a Nexus Gateway. The Gateway is software which includes all the functionality required to:
Communicate with other IPSs (through the Gateways that they operate)
Coordinate the processing of payments between two IPSs
Facilitate communication between the banks involved in a payment, particularly around compliance
Coordinate the provision of FX quotes from FX Providers (discussed below).
Nexus Scheme Manager
The Nexus Scheme Manager is a governance entity that manages the rules and governance of Nexus, as well as updating the Nexus Gateway software. It is not involved in the day-to-day processing of Nexus payments. See Nexus Scheme for further details.
FX Provider
The FX Provider is the financial institution that swaps the sender’s currency for the recipient’s currency. They hold the Destination Currency before the payment and the Source Currency after the payment.
If an FX Provider is not a member of both the Source and Destination IPS, then it must use one or two Liquidity Providers (described) who are IPS members to receive and make payment on the FX Provider’s behalf. If an FX Provider is a member of the Source or Destination IPS (or both) then it can act as a Liquidity Provider to itself.
IPS Member
This refers to any financial institution that is able to send or receive payments through the domestic IPS on behalf of its customers. 
Each IPS (or its supervisor or regulator) will define the types of institutions that can become IPS members. Some IPSs allow non-bank Payment Service Providers (PSPs) to initiate payments as well as banks. Nexus is agnostic towards the regulatory status of IPS members and does not set additional access criteria. These documents use "bank" to refer to both banks and non-bank Payment Service Providers who are eligible to initiate instant payments via the local IPS. 
Some IPSs have a number of membership models, for example, distinguishing between a full member or an indirect access model. In this blueprint, we use “IPS member” to mean any institution that can initiate and receive a domestic fast payment, regardless of their specific membership or regulatory status.
Terminology: Banks & Payment Service Providers
The term “Payment Service Providers” is used differently in different countries. In some countries, it implies a firm that provides payment services which is not a bank (non-bank PSPs); in other jurisdictions or schemes (such as SEPA) it is used inclusively to apply to all institutions that provide payment services, including bank and non-banks. Some IPSs allow non-banks to be members, while others do not. For simplicity, in this blueprint we use “banks” to refer to all IPS members, including non-bank PSPs.
Roles of IPS members
IPS Members play four distinct roles in a Nexus payment (described in detail below):
The Source Bank (or PSP)
The Source Liquidity Provider
The Destination Liquidity Provider
The Destination Bank (or PSP)
Nexus payments are made in two legs. The first leg is between the Source Bank and the Source Liquidity Provider in the Source Country and then the second leg is between the Destination Liquidity Provider and the Destination Bank in the Destination Country. This flow is explained in detail in An end-to-end payment through Nexus.
Combining roles: Some of these roles can be combined and performed by the same actor. For example, if an FX Provider is a member of both the Source IPS and Destination IPS, it can also fulfil the role of the Source Liquidity Provider and the Destination Liquidity Provider. This means that there can be 2-5 separate entities involved in each payment. See Roles vs Entities for further detail.) 
IPS Member role: Source Bank
The Source Bank (or PSP) holds an account for the Sender, denominated in the Source Currency. It is responsible for setting up and initiating the Nexus payment as well as providing relevant notifications. It has other responsibilities, such as sanctions screening.
IPS Member role: Destination Bank
The Destination Bank (or PSP) holds an account for the Recipient, denominated in the Destination Currency. It is responsible for receiving the payment and notifying the recipient. It has other responsibilities, such as sanctions screening.
IPS Member role: Source Liquidity Provider
The Source Liquidity Provider is a member of the Source IPS. They accept funds from the Source Bank through the Source IPS and credit that amount to a “vostro” account held by the FX Provider. It has other responsibilities, such as sanctions screening.
IPS Member role: Destination Liquidity Provider
The Destination Liquidity Provider is a member of the Destination IPS. They maintain an account for the FX Provider. When they make a payment on behalf of the FX Provider, they debit the FX Provider’s account and then pay funds to the Destination Bank, using funds in their own IPS settlement account. It has other responsibilities, such as sanctions screening.