Nepal, India to operationalise cross-border digital payments

Nepal and India have reached key agreements to operationalize cross-border digital payments, a move that will finally allow Nepali citizens to use their phones for transactions while in India. This understanding, finalized during Nepali Foreign Minister Shisir Khanal's visit to India, addresses a long-standing delay in reciprocal payment services.

While a cross-border QR payment system was launched in March 2024 enabling Indian tourists to pay in Nepal, Nepalis traveling to India have been unable to do the same. This imbalance stemmed from technical issues and a preference by both countries, particularly India's NPCI, for a high-level diplomatic launch. Deadlines, including one in December 2024, passed without the service becoming available.

A primary obstacle was the difference in transaction costs: Nepal charges merchants 1.3-2 percent per QR transaction, while India's UPI has been free for users and merchants since 2020. The reciprocal service launch was stalled by uncertainty over who would bear the processing costs for Nepali payments in India.

Saturday's agreement resolves these technical issues by linking India's UPI with Nepal's National Payments Interface. Indian Foreign Minister S. Jaishankar confirmed the linkage will facilitate cross-border personal remittances. The visit also yielded agreements on handing over 72 health and 12 cultural projects in Nepal, part of India's post-earthquake reconstruction aid.

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The linkage between India’s UPI and the National Payments Interface of Nepal will facilitate cross-border personal remittances.