In recent times, the trend of adopting digital payment services has been increasing at a breakneck speed in the country. This can be attributed to a sharp rise in the number of mobile banking users along with an increment in the number digital service providers.
According to the date provided by Nepal Rastra Bank, the number of mobile banking users reached around 6.4 million in 2018 from around 3.5 million in 2017. It is estimated that 28 commercial banks have 5.8 million mobile banking users while 33 development banks and 24 finance companies have 500 thousand and 18 thousand such users respectively.
Similarly, the total number of internet banking users stands at around 900 thousand and there are around 3,100 ATM counters in total in the country.
Likewise, the total number of debit card users belonging to the commercial banks, development banks and finance companies is around 6 million. And, there are around101 thousand credit card users in total belonging just to the commercial banks. Notably, it was after the establishment of a separate payment system department under the NRB in 2072 BS that the number of credit card users started to augment.
On the other side, a number of digital service providers like E-sewa, Khalti, IME Pay, Prabhu Pay QPay, iPay, etc are operating into the market.
Digital payment or wallet mobile, the latest innovation in the field of Information Technology, is mostly used for utility payments (electricity, water bills), mobile top-ups, airline ticketing, movie ticketing etc.
“With the concept of the cashless economy gaining momentum globally, Nepal is also witnessing an upsurge in digital payment services,” says Narayan Prasad Poudel, spokesperson of the NRB. According to him, the adoption of such tech-based services will help reduce the costs of tens of millions of being borne by the central bank annually in printing Nepali notes, the durability of which is also lesser than foreign ones.
“On the other side, online transactions are more effective and secure, thanks to advancements in digital payments technology, demographic shifts, and the evolving cyber-security landscape.”
In order to facilitate the growth of digital payment, the central bank seems to be adopting several legal and policy related measures. “We are engaged in the effective implementation of the Payment and Settlement Act (2075), Payment and Settlement Bylaw (2072), Payment System Oversight Framework. And, this is triggering an encouraging upsurge in the number of users of mobile banking, internet banking, debit card and credit card,” states Poudel.
The advent of online digital payment service has, of course, eased the daily life of people. They no longer need to undergo the hassle of queuing up for hours to pay bills.
They are also just one tap away from recharging their mobile balance or buying a ticket for their favorite movie. Moreover, they can get different offers for using these services including cash back when they use these apps for any purchase.
Narayan Das Manandhar, the CEO, Prime Commercial Bank, also concurs that the latest technological breakthroughs like e-payment have brought greater ease and efficacy in the daily lives of people. “It offers a host of advantages like cost and time savings, increased sales and mitigation of security risks that come with handling cash money.”
On the other side, digital payment is also being increasingly looked upon as a viable tool to help expedite the country’s socio-economic growth. In fact, the government also plans to integrate digital payments into the national economy to address the crucial issues of broad economic growth and individual financial empowerment.
“Digital finance also ensures transparency in financial activities, thereby reducing tax evasion and facilitating the government agencies to keep track of such activities,” says Manandhar.
No technological innovation is completely free from unseen risks and pitfalls and the same is also true in the case of online payment. Such risks are associated with system hacks, network failures and, most importantly, monetary fraudulence.
As the digital payment services are rapidly expand in Nepal, more risks are likely to emerge. As such, it is crucial to identify and assess associated risks and take appropriate measures.
“The government shall inform and educate general public about the benefits as well as the potential threats of electronic transactions,” say the experts adding, “The development of an effective regulatory mechanism could well avert the potential illicit activities.” According to them, the concerned authorities should be cautious enough not to infringe upon the privacy of citizens while regulating digital payment services.
