Ganga Tamang, from Chobhar, runs a small grocery and tea shop. She never imagined needing a bank account since her husband manages all their finances.

At 43, she became a proud bank account owner, thanks to the digital payment system.

“As customers kept on querying about quick response (QR) code payment, two years ago, my husband opened my bank account,” said Tamang, who hails from Khotang.

Her husband is a carpenter. She looks after the shop.

Tamang initially found it difficult to operate the system.

“The QR code system is quite easy, indeed. The money goes directly to my bank account and has helped me save most of the earnings.”

“My children, in grades 10 and 12, also use scan and pay. I find it easier to transfer cash to them when needed. I also buy stock for the shop through QR.”

Experts say the adoption rate of digital payments grew significantly in 2024, and the outlook is promising.

However, there is still a substantial lack of inclusivity, which is an issue that stakeholders need to address in the future.

Sanjib Subba, a fintech expert, says that while the adoption rate of digital payments is improving, it is primarily seen in urban centres. However, technology has not yet reached the last mile.

"Even in urban areas, digital payments are predominantly used by middle-class and upper-class individuals. Due to high data costs, digital payments are not inclusive," Subba explains.

He emphasised that there is still considerable potential for expansion, and to achieve this, transaction costs need to be eliminated. Subsidies for infrastructure, such as hardware and data centres, should be provided, and mobile data costs must be reduced or made free.

“One way to make digital payments more inclusive is through digital lending. I believe this trend will begin in the coming days,” Subba added.

He also noted that mobile data and digital payments have become fundamental human rights which must be advanced to the next level.

"Digital payment services must be available from the Tinker of Darchula to Olangchung Gola of Taplejung. We must reduce costs, increase awareness, and promote stakeholder dialogue to achieve this. The government must prioritise the development of digital public infrastructure."

Subba outlined that a connectivity highway, meaning internet access, electricity, and acceptance points, needs to be established throughout the country.

According to data from Nepal Rastra Bank, the central bank, digital payment transactions through mobile banking, e-wallets, and QR-based payments increased sharply between mid-October and mid-November compared to last year.

Mobile banking transactions rose to Rs374.66 billion from Rs218.3 billion. E-wallet transactions grew to Rs37.31 billion from Rs20.24 billion, and QR-based payments surged from Rs32.01 billion to Rs66.87 billion. Cross-border QR code payments increased to Rs156 million from Rs139 million in the review period.

Amit Agrawal, co-founder of digital wallet Khalti, says the country is entering a new era of digitalisation and most importantly, digitalisation is helping financial inclusion.

“If payment service providers start financial services by depositing and issuing small loans, this will be a great stride in financial inclusion. This will help bring about an economic revolution.”

Starting insurance services will also help bring many people under insurance coverage, as very few people in the country have taken the service. “We have started it already.”

“We are trying to digitalise the industry one by one. It takes a lot of hard work to digitalise an industry that involves working on awareness and confidence, educating users and making them learn the process, access, and trust,” says Agrawal.

Several issues need to be tackled, including seamless connectivity, legislation for data sharing and effective monitoring and supervision. Still, the most pressing one is an effective customer grievance redressal mechanism.

The use of cheques in Nepal has markedly declined as cashless payments have become more common.

According to the Payment Oversight Report published by the Nepal Rastra Bank, the number of cheques presented at banks dropped by 8.97 percent to 15.22 million in the fiscal year 2022-23. It was 16.72 million in 2021-22.

As a result, the number of transactions done through cheques also declined to Rs7.83 trillion from Rs10.53 trillion during the review period, marking a one-fourth reduction.

“Digitisation has increased dramatically over the past two years,” according to the report's author, Gunakar Bhatta, executive director at the Nepal Rastra Bank.

He also said that transactions through QR codes have doubled in this period.

“There has been a significant growth in mobile banking users as well.” However, there is still a long way to go, and the country remains cash-friendly.

The overwhelming number of transactions in the country still involves cash. Although Covid-19 gave digital payments a nudge, cash is still heavily used.

There has been a revolution in payment for utility services, one of the biggest hassles consumers used to face—making long queues in front of electricity, water, and telecom offices—to pay bills.

“When we started online mobile recharge service in 2017, it took a lot of hard work as people did not trust us much. The telecom companies have also not adopted an application programme interface (API), and we used to buy recharge cards and upload the PIN on an Excel sheet. That is how the online recharge started. Now, it's common,” says Agrawal.

The move has cut on the printing of recharge cards and thus saved the country a lot of money.

Online payment and booking of flight tickets, movie tickets, and events has saved time and extra money as all this can be booked instantly with a click.

“Digitalising industry benefits all,” said Agrawal.

Some digitisation projects are underway.

“The work on digital bank licensing is underway, and I believe the digital banking concept will become a trend in 2025,” says Subba.

He also stressed the need for a standard national QR code to facilitate seamless payments.

“Without interoperability, service users cannot make payments between different e-wallet providers or payment system operators, which is inconvenient and discourages digital payments,” Subba noted.

In 2024, the government introduced a 13 percent VAT on digital transactions, which some experts found counterproductive. However, in September, the government refunded 10 percent of the tax on transactions made at bars, restaurants, hotels, motels, lodges, and guesthouses.

“It was a strange policy. If you pay through cash, you don’t have to pay tax; if you pay through digital means, you must pay tax. To build a digital economy, digital payments must be robust and cost-free,” says Subba.

Cybersecurity is another critical area that requires attention. Experts believe AI-enabled cybersecurity solutions and efforts to integrate AI with digital payments must be introduced.

On the cross-border digital payment front, there have been notable achievements.

Starting March 1, 2024, Indians were allowed to make payments for purchases in Nepal using their mobile phones, a significant milestone in cross-border digital payments between the two countries.

On November 7, a scan-and-pay service was introduced for travellers from 10 countries and regions, allowing them to make payments in Nepal through the NEPALPAY QR code.

Travellers from China, Hong Kong, Macao, Singapore, Malaysia, the Philippines, Mongolia, Thailand, South Korea, and Italy can now use their respective payment and bank apps to pay in Nepal via QR code.