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🇳🇵 Nepal /Economy & Trade

Nepal-India QR Payment System: A Two-Year Wait for Reciprocity

From Kathmandu Post · (36m ago) English Critical tone

Translated from English, summarized and contextualized by DistantNews.

TLDR

  • India and Nepal launched a cross-border QR payment system in March 2024, allowing Indian tourists to pay in Nepal but not vice versa.
  • Delays in launching the reciprocal service for Nepalis in India are attributed to a preference for a high-level diplomatic launch and structural differences in payment systems, particularly transaction fees.
  • While a pilot rollout is imminent, full nationwide coverage in India for Nepali apps depends on all major banks completing certification, a process that is taking time.

Two years after its much-heralded launch, the cross-border QR payment system between India and Nepal remains a one-way street, much to the frustration of Nepali travelers. While Indian visitors can seamlessly pay for goods and services in Nepal using their mobile phones, Nepalis visiting India are still left waiting. Despite repeated assurances from Nepali financial institutions and the central bank that they are technically ready, the reciprocal service has yet to materialize, with deadlines passing without explanation.

Our ultimate goal is to achieve maximum coverage across all banks.

— Diwas SapkotaCEO of Fonepay, Nepal’s largest payment network, discussing the goal of expanding the payment system.

The primary hurdle appears to be a desire for a high-level official announcement, ideally during a prime ministerial visit, to be leveraged as a diplomatic gesture. However, the lack of such visits and immediate plans for them has stalled this symbolic launch. More fundamentally, the delay stems from a significant structural difference: Indian UPI transactions are free for users and merchants, whereas Nepal charges a transaction fee of 1.3 to 2 percent. This raises the question of who will bear the processing costs when Nepalis pay in India – the Nepali issuing bank, the Indian acquiring bank, or the merchant.

But full nationwide coverage in India for Nepali apps will remain an issue until every major bank completes its certification.

— Diwas SapkotaCEO of Fonepay, explaining a key obstacle to full implementation of the cross-border payment system.

Officials at FonePay, Nepal's largest payment network, are working with India's NPCI to address these policy gaps and facilitate payments. While recent meetings have focused on these issues and a pilot rollout is expected soon, full nationwide coverage in India for Nepali apps hinges on the completion of bank certifications. The National Payments Corporation of India acknowledges progress but cites regulatory compliance and operational readiness as factors influencing timelines. From Nepal's perspective, the technical readiness is confirmed, with trial transactions already conducted. The ongoing delays, however, highlight the complexities of integrating financial systems between the two nations, particularly when differing economic models and diplomatic considerations are at play.

Progress is being made, with timelines being aligned with required regulatory compliance, governance frameworks, and operational readiness.

— National Payments Corporation of IndiaThe operator of India’s retail payments infrastructure, responding to queries about the progress of the cross-border payment system.
DistantNews Editorial

Originally published by Kathmandu Post in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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