National payment switch goes into serviceThe payment gateway brings together banks and digital payment vendors allowing them to transfer money.
The national payment switch started functioning from Thursday with Nepal Clearing House launching service after getting operation approval from Nepal Rastra Bank.
The payment gateway brings together banks and digital payment vendors allowing them to transfer money. As part of the first phase, 29 banks and financial institutions have been affiliated to the national payment switch. Among those joining the system are 18 commercial banks, five development banks and six finance companies.
Payments made from bank accounts, e-wallet and quick response (QR) for retail transactions except cards are included under the first phase. Under this system, payment equipment including Nepal-Pay QR and Network QR as per Nepal QR Standard, Direct Debit Request-To-Pay and E-Mandate equipment, inter-connection between wallets, inter-connection through biller gateway for different payment and PSO settlement are available.
Being the prime infrastructure for retail payment, the switch provides real time and non-real time services and open banking API (application programme interface) which permits banks, financial institutions and non-banking institutions to share financial information with one another.
Nepal Clearing House has gone into service according to the directions 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.
The national payment switch will settle accounts centrally and keep a central record of all electronic transactions that are done through banks, financial intuitions and digital payment service providers. It will provide updated records of the mode of electronic payment and the transaction amount in real time, the central bank said.
The national card system will help to settle transactions domestically and prevent money from going out of the country.
Digital payment systems started gaining widespread popularity in Nepal after the government imposed a nationwide lockdown on March 24, 2020 ordering people to stay at home to prevent the spread of Covid-19.
The rising number of smartphone users and increasing internet penetration has boosted digital payments overall.