National payment switch expected to launch soonThe payment gateway will integrate multiple banks and digital payment vendors into one system enabling them to transfer funds.
The national payment switch is expected to launch soon with Nepal’s central bank giving approval to Nepal Clearing House to operate it.
The payment gateway will integrate multiple banks, digital payment vendors such as interbank payment system (IPS), ConnectIPS, quick response (QR) code and other digital ecosystem players into one system enabling them to transfer funds.
Nepal Rastra Bank has assigned the technical and functional work of the national payment switch to Nepal Clearing House.
The central bank had initially said the project would be implemented by the first quarter of the current fiscal year but it didn’t happen.
“We are not far behind schedule,” said Bhuban Kadel, executive director of Nepal Rastra Bank. “The formal date for the operation of the national payment switch will be announced soon.”
The launch date will be finalised after Nepal Clearing House completes the formality of signing memorandums of understanding with banks and financial institutions, Kadel said.
“We have just received approval for the implementation of the first phase of the national payment switch from the central bank, and we are preparing to go live soon,” said an official at Nepal Clearing House. The company was established in 2008 to facilitate electronic payments and financial transactions within the country.
The first phase involves working on routing non-card transactions. All non-card transactions in the country that are done through mobile banking, e-banking, e-wallet or QR code will be routed through the national payment switch in the first phase.
The company has been working according to the direction provided by the central bank for quick response (QR) interoperability and service interoperability.
In the second phase, the company will work on the national cards system; and in the third phase, all domestic electronic transactions will be routed through the national payment switch, as per the company.
Currently, domestic Visa and MasterCard transactions are switched through international payment gateways and are charged in dollars per transaction. But with the implementation of the national payment switch, the card payment switch will be made inside the country which will reduce charges, and make transactions faster and convenient, the company said.
According to statistics issued by Nepal Rastra Bank, electronic payment transactions swelled to Rs753.30 billion in the first two months of the current fiscal year, ended mid-September, from Rs374.45 billion in the same period in the last fiscal year.
A total of 101.66 million transactions were made during the review period, compared to 56.12 million transactions during the same period last year.
Transactions made through digital wallets doubled to Rs28.47 billion from Rs14.91 billion previously.
Digital payment boomed in the country during the Covid-19 pandemic in 2020 with people being grounded and forced to pay for utilities and goods using online methods.
E-commerce entrepreneurs say that more people are choosing to make payments online.
Almost 85 percent of the payments made during Sastodeal's sales campaign this year were done through digital payment mode, up from 40 percent last year, the company said.
Daraz said online payments accounted for 43 percent of its transactions during the festival season.
E-commerce transactions through payment gateways like eSewa jumped by 300 percent compared to a year ago. During the first lockdown, the company acquired 350,000 new customers, growing more than three times from normal times.
Internet penetration has also been increasing with broadband reaching 110.68 percent of the population as of mid-September, according to a management and information system report.
In a recent discussion regarding the e-commerce ecosystem, Mahesh Sharma Dhakal, senior deputy chief executive officer of Global IME Bank, said that banks possessed technology for digital payment.
Presenting the monetary policy for the current fiscal year, Nepal Rastra Bank Governor Maha Prasad Adhikari said they planned to celebrate the fiscal year 2022-23 as electronic payment transaction promotion year. Developing essential infrastructure and raising awareness about a cashless society will be the central bank’s key focus in that fiscal year.