Nepal Rastra Bank (NRB) has turned flexible on allowing individuals to use Quick Response (QR) codes for cross-border financial transactions with India.
By amending the unified circular issued by the Foreign Exchange Management Department of the NRB on Thursday, the central bank has permitted the concerned to use QR codes and related payment tools by using Retail Payment Switch. As of now, such transactions have been permitted only by using a national payment switch.
“The payments for goods and service sales can be received in foreign currencies by using electronic payments including QR codes,” reads a statement issued by the NRB. The central bank in this regard, has directed the payment service providers (PSPs) to use the Retail Payment Switch until the national payment switch is brought to full-fledged operations.
The NRB has permitted the PSPs to carry out acquiring and issuing transactions under the Merchant Payments (P2M). The PSPs will have to sign a memorandum of understanding with the foreign companies only after receiving approval of the Payment Systems Department of the NRB.
The PSPs have been asked to submit documents including the main agreement paper and profile, interface and configuration transaction of the foreign companies. Likewise, they have to submit evidence on cyber security provision and prevention of money laundering and terrorist financing.
If there is any defective transaction, force settlement should be done on a T+30 days basis. Both the companies undertaking the role of issuance and acquiring will be liable to supervision of the settlement process.
Likewise, the companies that have not taken licenses to transact in foreign currencies have been permitted to receive money from abroad by using PSPs’ account and wallet. Such companies will receive payments only in the Nepali currency via the Nepali banks designated for settlement of transactions.
Similarly, the clients of Nepali commercial banks and national level development banks can use QR codes to exchange the Indian currency. The facility can be used only for payments to be made in India and Bhutan.
The cross-border payment system is expected to be a boon for Nepali entrepreneurs and also the Indian visitors. Earlier, a bilateral agreement for the digital payment system was signed during the India visit of Prime Minister Puspa Kamal Dahal in June 2023.
