People in India or Indian visitors in Nepal will soon be able to use Unified Payments Interface (UPI), an Indian payment system, to make digital payments in Nepal.
Gateway Payment Service Pvt. Ltd., commonly known as PaymentNepal, a licenced payment system operator in Nepal, is preparing to build an interoperable network between banks in the country that will also enable a cross-border digital payment system between India and Nepal.
The system will be based on India’s Unified Payments Interface (UPI) platform. It is a system that will enable multiple banks to be interoperable. Users can use a quick response code (QR code) to make payments.
The platform is developed by the National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India.
Nepal to adopt UPI
NPCI International Payments Limited (NIPL), the international arm of NPCI, joined hands with Gateway Payments Services Pvt. Ltd. (PaymentNepal) and Manam Infotech Pvt. Ltd., a fintech company in Bangalore, to deploy the UPI in Nepal.
PaymentNepal will operate and manage UPI in Nepal, while Manam Infotech Pvt. Ltd. will provide UPI technology and operational support to the payment system operator in the country.
“The same UPI service has created a significant positive impact in India in terms of the country’s digital payment transformation. We expect UPI in Nepal would play a pivotal role in transforming the digital economy of the country and dreams of building a less-cash society.”
—Rajesh Prasad Manandhar, CEO of Gateway Payment Service Pvt. Ltd. (PaymentNepal)
PaymentNepal is set to make the service live in the next two months. The service will be available in the apps of banking and financial institutions and payment service providers (PSPs).
With this, Nepal becomes the first country outside of India to adopt UPI as the payments platform.
The platform will enable real-time inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions not just in Nepal but also from India to Nepal.
However, PaymentNepal will not allow making payments from banks in Nepal to India at the moment due to some restrictions imposed by Nepal Rastra Bank, the central bank of Nepal. The company stated that they are working on it.
“The system is capable of processing payments from Nepali banks to India, but we cannot allow this for every bank in Nepal at the moment,” PaymentNepal spokesperson Praveen Regmi told TechLekh.
He added, “To make outward payments through the system, the Nepali bank must get permission from the Nepal Rastra Bank.“
India’s UPI transactions reached $940 billion in 2021
According to a statement issued by the company on February 17, 2022, UPI enabled 39 billion financial transactions amounting to commerce worth USD 940 billion in 2021, which is equivalent to approximately 31% of India’s GDP.
Nepal has a population of ∼ 30 million and around 45% banked. Mobile penetration of over 135% with 65% of the population using smartphones provides a bedrock for seamless replication of the digital revolution in India to be replicated in Nepal, the statement stated.
The statement further added that over the next few months, all three companies will work closely together to deploy Unified Payments Interface in Nepal along with all the functionalities and features presently available in India.
Earlier this month, Nepal Rastra Bank, the central bank of Nepal, also directed all licenced digital payment service providers in the country to implement interoperability.