A year has passed since Indians in Nepal were allowed to make quick response code payments through their mobile phones. However, Nepalis are still waiting to make QR payments in India.

On March 1, Indians in Nepal were granted the ability to make payments via their mobile phones, proving to be a boon for tourists, particularly those from India.

The development was celebrated as a milestone in cross-border digital payment between Nepal and India, easing transactions for students and individuals travelling to India for medical purposes.

Despite Nepali payment system operators and banks stating they are ready to initiate QR-based payment operations in India, delays from the Indian side have prolonged the wait for nearly a year.

Different timelines were anticipated by Nepali payment system operators based on developments in India, but these dates have been repeatedly postponed.

Initially, the launch of a QR code payment system for Nepalis in India was planned for December 2024.

However, the process was delayed due to issues concerning commission payments, particularly the uncertainty regarding who would bear the cost of service commissions for Nepali banks.

In India, no charges are levied on QR code payments. Still, for Nepalis to pay via QR code in India, a commission must be allocated to Nepali banks to provide the service.

In Nepal, Indian travellers paying through QR codes are subject to a minimal standard charge of 1.95 percent, applied to merchants per transaction when receiving payment via UPI-enabled apps.

The launch of QR payments for Nepalis in India was later rescheduled for early 2025, but more than two and a half months into the year, its implementation remains uncertain.

“In a new development, we have come to know that scan and pay for Nepalis in India might begin a pilot phase in two months,” said Paras Kunwar, chief operating officer of Fonepay.

“According to updates from the Indian side, necessary changes have been completed, and trials have commenced.”

Kunwar further stated that the Reserve Bank of India (RBI) is set to issue a notice regarding transaction charges.

Once the RBI circulates this directive to Indian banks and they approve it, the service could go live. The delay stems from practical difficulties, as implementing significant financial changes in a country with a vast population requires time.

When the QR payment service was launched in Nepal, daily transactions numbered around 500 for the first three to four months.

This figure has now surged to 2,000 daily transactions, with a total daily transaction value of Rs6 million.

“Since the service was launched in March last year, total transactions have reached Rs1.6 billion,” said Kunwar. Indians have utilised QR payments across all seven provinces, including at small tea shops, hotels, religious sites like Muktinath and Pashupatinath, and trekking destinations.

Many Indian visitors remain unaware of the scan-and-pay service in Nepal, prompting NPCI International Payments Ltd (NIPL) to launch an advertising campaign focused on Indian border points and airports.

“We expect daily transactions to reach Rs10 million within the next four to five months,” Kunwar added.

With the onset of the tourist season, an increase in transactions is anticipated, particularly along the Pokhara route. The Unified Payment Interface (UPI) user base in India is approximately one billion, so even a fraction of Indian tourists using QR payments in Nepal could significantly boost transaction volumes.

Nepal is technically prepared to initiate QR payments in India, having received approval from Nepal’s central bank.

However, implementation hinges on approval from the Indian authorities. Nepal has already successfully trialled transactions in India. In September last year, Nabil Bank conducted a test transaction using its mobile banking app in Mumbai, achieving a positive result.

On June 1 last year, Nepal and India signed a memorandum of understanding for cross-border digital payments to facilitate digital transactions for businesspeople, students, and tourists from both nations.

The agreement was signed and exchanged between Nepal Clearing House Limited (NCHL) and National Payments Corporation of India (NPCI) International Payments Limited in New Delhi, India.

The introduction of digital remittance services under this cross-border payment agreement has also been delayed on the Indian side. Although the NCHL agreed to implement the cross-border digital remittance service, it has yet to be initiated, even a year after the agreement.

NCHL is 10 percent owned by Nepal Rastra Bank, with the remaining 90 percent held by commercial banks. The central bank assigned NCHL to establish and operate a national payment switch and card system.

In September last year, Fonepay Payment Service Ltd, Nepal’s largest payment network, and NPCI International Payments Ltd (NIPL), the international arm of the National Payments Corporation of India, agreed to launch the first QR code-based payment solution between Nepal and India.

The QR code system has significantly benefited tourists, particularly Indians, by reducing the need to carry cash, especially since the Nepal government has banned all Indian currency notes above Rs100.