Nepal's Parliament passed the Electronic Commerce (e-commerce) Bill on Sunday, marking a milestone in regulating the country’s burgeoning online trade, nearly two and a half decades since the launch of Nepal’s first online store.

The bill includes revisions of the penalties for online business platforms.

Under the amendment, if platform operators fail to meet their legal responsibilities, they could face a jail term of up to three years, an increase from the previously proposed two years.

The upper house approved the list of amendments to the E-commerce Bill prepared by the lower house on Sunday, a year and a half after the upper house initially passed the bill.

The lower house had passed it on February 18.

The bill proposes fines ranging from Rs300,000 to Rs500,000, jail terms, or both, depending on the severity of the cases.

“Now, after necessary amendments by both houses, the bill has been passed,” said Manoj Giri, the upper house's joint secretary.

“Once the President signs the bill, it becomes law.”

Officials stated that the lower house made several amendments to the bill.

The bill defines an e-commerce business as the buying and selling of goods and services through an online platform.

However, according to the amendments, online platforms that only inform or promote goods and services are not considered e-commerce businesses.

The bill stipulates that an intermediary business platform’s agreement with sellers willing to sell goods using the online platform must be in two forms: written and online. Previously, only written agreements were allowed.

As per the previous bill, an ‘online intermediary business’ referred to an online platform, a national or international company, or a firm or organisation that facilitated the exchange of online information for trading goods and services between sellers and buyers.

Under the amendment, an online intermediary business is now defined as a company that facilitates the sale of goods and services by connecting buyers with sellers through its online platform.

The earlier bill mandated that every trader operate an online business through an online platform. However, the amended bill also allows micro and cottage entrepreneurs to sell their goods and services using other online platforms.

The amended bill extends the deadline for traders to update the details of goods and services in case of any changes from 24 to 48 hours.

According to the bill, a contract agreement between buyers, sellers, and traders will be established when goods are transacted through the e-commerce platform. If any liabilities arise, the responsible party must address them.

The previous bill required buyers to pay traders directly, but the amended bill allows buyers to pay either the traders or transporters on behalf of the traders.

Payments made to transporters are considered payments to traders.

The bill includes a refund policy for buyers if the purchased goods and services do not match the listed details, such as design, trademark, shape or picture, and weight.

Buyers can request refunds if the delivered goods differ from the provided information, including the final sale price, additional delivery charges, usage warnings, and delivery time and date.

Refunds are also applicable if the online and delivered goods differ in warranty and guarantee periods or if there are changes in the name, firm, company, or country of production.

Sellers cannot refuse refunds if the goods do not match the agreed description, are delivered late, or are defective.

The bill was registered in the National Assembly—the upper house—by the then-Industry Minister Ramesh Rijal in July 2023.

The government moved to enact the bill decades after e-commerce began in Nepal, pioneered by online seller muncha.com.

Muncha House, established in the 1920s, was the first department store in Nepal. It ventured into online shopping in 2000 as muncha.com to offer a gift gallery to non-resident Nepalis looking to surprise family and friends back home.

The draft bill was prepared in 2021 but stalled due to frequent government changes.

The absence of a law governing e-commerce has allowed unscrupulous practices to flourish.

Many customers have reported receiving damaged products, wrong items, price discrepancies, and lacking return and refund options.

Consumer rights activists and e-retailers have long pushed for an e-commerce law in Nepal. They argue lawmakers have failed to keep pace with business trends, thereby enabling unethical market practices.

“This is the most awaited e-commerce law,” said Bishnu Prasad Timilsina, general secretary of the Forum for Protection of Consumer Rights-Nepal.

“A successful implementation, amid rising online shopping fraud, will go a long way towards protecting consumers.”

He added that effective enforcement of laws has historically been a challenge in Nepal.

E-commerce entrepreneurs noted that while the bill is a step forward, it still omits crucial elements like regulating unhealthy price competition among online retailers and data privacy.

According to the bill, e-commerce platforms must be registered in the electronic system of the Department of Commerce, Supplies, and Consumer Protection.

Online businesses that fail to register face fines ranging from Rs10,000 to Rs50,000.

The department will conduct regular inspections.

To operate an e-commerce business, traders must establish an e-commerce platform and a dedicated section for customer grievances.