Nepal-India digital payment system to launch in NovIndian tourists will be spared the hassle of carrying bundles of cash as large banknotes are banned in Nepal.
The much-awaited Nepal-India digital payment system is expected to begin by November as the technical work has been completed, say payment service providers.
“All technical preparations have been done. We are set to launch the Nepal-India cross-border person-to-person fund transfer system by November,” said Munni Rajbhandari, chief operating officer of Nepal Clearing House, a payment system operator.
“This will be the first phase of the cross-border digital payment system,” she said.
Despite being next-door neighbours, financial transactions are complicated. The digital payment system is expected to ease digital transactions between Nepal and India for business people, students and tourists.
The proposed system will enable person-to-person and merchant payments. "Funds transfer can be done through mobile banking," Rajbhandari said.
"A person can make a bank transfer to India to a unified payment interface (UPI) ID through mobile banking, and banks which are ready for cross-border digital payment in India can make a bank transfer to banks in Nepal through mobile banking on a unique identifier—which can be a mobile number," she said.
“The second phase of cross-border digital payment, which is payment through quick response (QR) code, will be implemented by December,” Rajbhandari said.
In June, Neelesh Man Singh Pradhan, CEO of Nepal Clearing House, and Ritesh Shukla, CEO of National Payment Corporation of India International Payments, signed and exchanged a memorandum of understanding on behalf of their respective organisations for a cross-border digital payment system in New Delhi, India.
On Thursday, Fonepay and National Payments Corporation of India launched the first ever cross-border QR payment system between India and Nepal during the Global Fintech Fest 2023 held in Mumbai, India.
Fonepay said all preparations had been completed and QR payment would go live by the end of November. The company signed a cross-border digital payment agreement with National Payments Corporation of India two years ago.
According to Nepal Rastra Bank, electronic payment transactions in Nepal totalled Rs5 trillion during the period mid-June to mid-July compared to Rs6.22 trillion during the same period in the last fiscal year.
Last May, payment system operator Gateway Payment Service began a cross-border payment system for the first time in Nepal, based on interoperable and mobile-first technology.
National Payment Corporation of India and its international arm International Payments have joined hands with Gateway Payment Service and Manam Infotech to deploy a unified payment interface in Nepal.
The UPI is a real-time payment system that provides person-to-person and person-to-merchant transactions simply, safely and securely in India.
The cross-border payment system is expected to be a boon for Indian visitors as they will be spared the hassle of carrying bundles of cash since Indian banknotes of denominations above Rs100 are banned in Nepal.
An overland Indian visitors’ survey conducted before the Covid-19 pandemic showed that the average length of stay of Indian tourists was 5.8 days. The average expenditure per visitor was Rs11,310.
According to Indian media reports, the advantage of travelling to Nepal, before the bank notes were banned, was that one did not need to change money.
On June 1, Fonepay signed a memorandum of understanding with Sri Lanka’s National Payment Network: LankaPay, to collaborate on a strategic partnership to revolutionise the digital payment landscape by developing an interoperable digital payment system that enables users to transact seamlessly across the two countries.
In June, Chinese digital payment service WeChat Pay and NMB Bank Nepal partnered to make mobile payment available in Nepal.
The service allows Chinese nationals visiting Nepal to pay for their purchases using their mobile sets. For now, the service is available only to Chinese visiting Nepal and not to Nepalis going to China.
There were 10 payment system operators (PSOs) and 27 payment service providers (PSPs) in Nepal as of mid-July. There were 14,123 PSP agents and 18.94 million wallet users in the country as of mid-July.
The expanding internet service in Nepal has boosted digital services.
According to the Nepal Telecommunications Authority, there were 3.93 million internet subscribers in the country covering 134.76 percent of the total population as of mid-May.