Efforts to implement the national payment switch began Thursday, when the Nepal Clearing House launched its service after receiving authorization from the Nepal Rastra Bank to do so.
To facilitate money transfers, the payment gateway connects banks and digital payment providers. A total of 29 financial institutions have joined the national payment switch as a part of the first phase. 18 commercial banks, 5 development banks, and 6 finance firms are among those that have joined the system.
Bank accounts, electronic wallets, and Quick response (QR) codes for retail purchases other than credit cards are included in the first phase of payments. Nepal-Pay QR and Network QR, Direct Debit Request-To-Pay and EMandate equipment, interconnection between wallets and biller gateways for different payment and PSO settlement are all available under this system.
Open banking API (application program interface) enables financial institutions to share financial data with one another because the switch is the primary infrastructure for retail payment. The switch provides both real-time and non-real-time services.
The Nepal Clearing House has begun operations in accordance with the central bank’s directives for QR interoperability and service interoperability.
It is expected that all domestic electronic transactions will be routed through the national payment switch in the third phase of the project, according to the company.
Paying in dollars per transaction for domestic Visa and MasterCard transactions is currently done via international payment gateways. This will change, however, since card payments will now be processed within the country rather than outside, reducing fees and making transactions more efficient, according to the company.
In the first two months of the current fiscal year, electronic payment transactions leaped from Rs374.45 billion to Rs753.30 billion, according to data from the Nepal Rastra Bank.
The review period saw 101.66 million transactions, up from 56.12 million in the prior year’s comparable period.
The number of transactions done using digital wallets increased from Rs14.91 billion to Rs28.47 billion.
Using the national payment switch, banks, financial institutions, and digital payment service providers will be able to settle accounts and preserve a central record of all electronic transactions. The central bank said it will offer real-time records of the method of electronic payment and the transaction amount.
Using a national card system will make it easier to settle domestic transactions and keep money in the country.
Immediately after the government issued a statewide shutdown on March 24, 2020, to prevent the spread of Covid-19, digital payment systems began to gain in popularity in Nepal.
Increased internet and mobile phone use has led to a rise in digital payments.