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Fees & revenue model
To make it attractive to participate in the Nexus Scheme involved actors will need to be able to recover their implementation and running costs. Nexus will therefore need to define a fee and revenue model that allows each actor in a payment to be compensated.
The Nexus Scheme does not restrict the actors in what fees they levy, but mandates that the fees (including FX rates) should always be transparent to the Sender (and Recipient, where applicable) and shared with the Sender before the payment is made. To support transparency, the Nexus Scheme would strongly discourage the practice of offering “free” transfers while hiding the fee in the exchange rate.
The table below provides an overview of the possible fee basis for each actor. Further work and engagement with industry would be needed to refine the model.
Actor
Type of fee
Source Bank
    The Source Bank will charge a fee to the Sender. This fee might include the Source Bank’s fee and an interchange fee requested by the Destination Bank
    The Source Bank needs to provide fee transparency towards the Sender, ie at a minimum level display (ahead of executing the payment) the fee it will charge for executing and completing the payment and the FX rate applied.
    Source Banks may decide to provide more detailed information on the fees levied, eg what fee the Destination Bank charges to the Recipient
Destination Bank
    The Destination Bank can charge a fee to the Recipient for successfully processing the incoming Nexus Payment in order to recover costs for implementation and running the service.
    The Destination Bank might also charge an interchange fee, to be paid by the Source Bank; the Nexus Scheme caters for this fee charging scenario by transmitting any interchange fees between the Destination and Source bank as part of the Nexus Account Validation flow.
    To support transparency and reconciliation, the fees charge by the Destination Bank need to be booked on the Recipient’s account as a separate line item (rather than a deduction from the amount received)
IPS (Source and Destination)
    The IPSs will need to recover the implementation and running costs associated with the Nexus Scheme, including the Nexus Scheme participation costs. The IPS will likely levy fees for the local members, (banks and liquidity providers). These fees may consist eg of a one-time implementation fee, a recurring fee and a fee per transaction.
Liquidity Provider (Source and Destination)
    To recover implementation and running costs, the Liquidity Provider can charge the FX Provider for its services; these fees are agreed bilaterally. If allowed by local regulation, a Liquidity Provider might also (partly) recover its costs through a local interchange fee (bilaterally agreed between Source Bank and Liquidity Provider or facilitated by the local IPS)
FX Provider
    The FX Provider will recover its implementation, running and FX conversion costs through a conversion rate with a mark-up. This will also need to cover any fees it needs to pay to Liquidity Providers
Nexus Scheme
    The Nexus Scheme will recover the costs of Scheme governance and the Nexus Gateway software development and maintenance by charging a cost recovery fee to the participants that adhere to the Scheme directly, i.e. IPSs and FX Providers. The fee can consist of a one-time scheme joining fee and a yearly recurring fee
It is possible that actors in the Scheme combine several roles. This will not impact what fees can be levied, nor the transparency requirements. It may lead to certain fees not being charged (bank) internal or maybe being charged between (internal) departments or subsidiaries.
It is expected that processing costs and fees will decrease as the Scheme is adopted by more participants and competition increases.
Last modified 2mo ago
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