digital payment system in nepal essay

The Digital Payment System in Nepal: From Cash to Cashless Economy

The roots of nepal’s digital payment revolution can be traced back to a time when the country operated with a dual currency system, with indian currency (inr) coexisting alongside the nepali rupee. the establishment of the nrb in 1956 marked a pivotal moment as it aimed to eliminate the dual currency system and instill confidence in the nepali rupee., by animesh shrestha | october 9, 2023, 6 minute read.

Introduction

It has been more than a decade since digital payments were first introduced in Nepal, with Kumari Bank being the pioneer in 2002. At present, there are more than five digital payment platforms established that have been operating digital payment services. Similarly, the majority of banks have e-banking services as well. We can also see the growing number of applications relying on digital payments for the exchange of goods and services. Nepal’s journey from a traditional cash-based economy to a burgeoning digital payment ecosystem is a remarkable transformation that holds significant implications for the nation’s economic development; with Nepal Rastra Bank (NRB) reporting significant growth in digital transactions. Between Mid July 2021-Mid August 2021 , the NRB recorded approximately 1.3 million QR-based payments, totaling NPR 5.1 billion. Fast forward to 2023, and this figure has surged to 11.2 million transactions, amounting to approximately NPR 30 billion , marking a sixfold increase in just two years. This exponential growth underscores the remarkable journey of Nepal’s digital payment system, driven by the concerted efforts of various stakeholders.

Historical Perspective

The roots of Nepal’s digital payment revolution can be traced back to a time when the country operated with a dual currency system , with Indian currency (INR) coexisting alongside the Nepali rupee. The establishment of the NRB in 1956 marked a pivotal moment as it aimed to eliminate the dual currency system and instill confidence in the Nepali rupee. This laid the foundation for the modern payment system that would gradually evolve in the coming decades.

The advent of information technology, particularly the discovery of personal computers and the internet in the 1980s and 90s, along with a more liberalized economic regime adopted in the 1990s, created an environment conducive to digitalization. During this period, Nepal’s banking industry embraced innovation by introducing card-based payment systems , internet banking, and SMS banking, facilitating the transition from a cash-dependent economy to a cashless one.

However, this transition was not without its early challenges, including limited digital literacy, infrastructure constraints, and regulatory complexities. Despite these hurdles, the adoption of digital financial services began to gain momentum.

Factors Driving the Digital Payment Revolution

The digital payment revolution in Nepal has been propelled by several key factors. Government policies and historical initiatives have played a crucial role in promoting digital payments, aligning with the NRB’s mandate to develop a secure and efficient payment system. This commitment to infrastructure development led to the establishment of the Nepal Clearing House Limited (NCHL) in 2008, which facilitated clearing and settlement operations.

The Nepal Payment System Development Strategy (NPSDS), formulated with assistance from development partners in 2014, set the stage for integrated and strategic development of the national payment system. The creation of the Payment System Department (PSD) in 2015 within the NRB further emphasized the importance of formulating policies, issuing licenses to Payment System Operators (PSO), and regulating and inspecting PSOs and Payment System Providers (PSP).

The government’s Digital Nepal Framework (DNF) in 2019 identified eight priority sectors, including finance, and provided a roadmap to unlock growth potential. With the implementation of systems like the Treasury Single Account (TSA) and Sub National Treasury Regulatory Application (SuTRA), the government has made significant strides in electronic fund transfers.

The digital financial ecosystem that has emerged in Nepal consolidates digital infrastructure and resources into a synchronized platform, enhancing financial inclusion, reducing gender gaps, and empowering vulnerable populations. It also fosters transparency, good corporate conduct, and prudent regulatory mechanisms, making it a prerequisite for sustainable economic development.

Cross-Border Initiatives

Nepal’s digital payment revolution has not been limited to its borders. Nepal and India are set to launch a cross-border digital payment system. The first phase of this initiative, a person-to-person fund transfer system, is expected to go live by November 2023 . This system will simplify financial transactions between the two neighboring countries for business people, students, and tourists.

Furthermore, Nepal is extending its digital payment partnerships beyond its borders. In June, Fonepay signed a memorandum of understanding with Sri Lanka’s National Payment Network: LankaPay, to develop an interoperable digital payment system enabling seamless transactions between the two countries.

Chinese digital payment service WeChat Pay has also made inroads into Nepal, allowing Chinese nationals visiting the country to make payments using their mobile devices. While currently limited to Chinese visitors, this initiative demonstrates the global reach of digital payment systems.

Future Challenges

While Nepal’s digital payment ecosystem has made remarkable strides, it still faces several challenges. Cybersecurity concerns and the need to protect data privacy remain paramount. Additionally, promoting digital literacy and awareness, especially in remote regions, is essential to ensure that all segments of the population can participate in the digital economy.

Expanding digital payment initiatives across borders and addressing regulatory challenges will be vital for sustained growth. Nepal has the potential to become a hub for cross-border digital transactions, further enhancing its role in the regional economy.

Predicted growth indicates a promising future for Nepal’s digital payment ecosystem, but addressing these challenges and seizing opportunities will be crucial for realizing its full potential.

The Positive Aspect

Amidst the transformative journey of Nepal’s digital payment ecosystem, emerges a significant positive aspect. Recent data showcases a remarkable surge in mobile and broadband penetration, indicating the beneficial impact of the digital payment revolution on the country’s financial landscape. Mobile money transactions, in terms of value, have witnessed substantial growth , surging from a modest 1.47 percent of GDP in 2019 to a substantial 10.97 percent in 2021. This notable increase signifies a growing acceptance and reliance on mobile-based financial transactions among Nepali citizens. Moreover, the expansion of the population with at least one deposit account in the Nepali financial system is a promising development. This metric rose from 60.9% to 67.3% during the period spanning 2019 to 2021, as per the Financial Access Report of 2021 . This growth reflects a broader financial inclusion trend, as more individuals, particularly those in underserved areas, gain access to formal financial services through digital channels.

Further indicators of the digital payment revolution’s impact include the proliferation of payment service providers, an increased number of wallet users, a growing customer base for internet and mobile banking services, a rise in point-of-sale and card-based payments, and an expanding adoption of QR-based payments. All of these trends collectively underscore the deepening of digital payment usage and the adoption of digital financial instruments by Nepali consumers.

Way Forward

To sustain and accelerate the digital payment revolution in Nepal, a collaborative effort is needed from all stakeholders. Policymakers should prioritize investment in digital infrastructure, streamline regulatory processes, and promote digital financial literacy. Private sector players must continue to innovate, reduce transaction costs, and enhance interoperability.

Individuals, as the ultimate end-users, should embrace digital services while taking necessary precautions to protect their financial transactions. The momentum of the digital payment system in Nepal offers a promising path towards a complete digital ecosystem that can drive sustainable economic development. Continued support, innovation, and international cooperation will be key to overcoming future challenges and maximizing the benefits of digital payments in Nepal.

Animesh Shrestha is a recent A-Level graduate from Little Angels College. He is currently working at Nepal Economic Forum as an intern wherein his interest lies in development economics, macroeconomics, and international relations.

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Essay on digital payment method in nepal.

Digital payment methods have become an integral part of our lives in recent years, and Nepal is no exception to this trend. With the increasing use of smartphones and the internet, digital payments have gained popularity as an alternative to traditional payment methods in Nepal. In this essay, we will discuss the digital payment methods that are popular in Nepal and their impact on the country's economy.

One of the most popular digital payment methods in Nepal is mobile banking. Mobile banking allows users to perform banking transactions through their mobile phones. It has gained popularity in Nepal due to its convenience and accessibility. Many banks in Nepal offer mobile banking services, including Nabil Bank , Nepal Investment Bank , and Nepal SBI Bank . Users can transfer money, pay bills, and even apply for loans through their mobile phones.

Internet banking is another popular digital payment method in Nepal. It allows users to perform banking transactions online through a secure internet connection. Internet banking is widely used in Nepal for online shopping, bill payments, and fund transfers. Many banks in Nepal offer internet banking services, including Himalayan Bank, Standard Chartered Bank, and Nepal Bangladesh Bank.

E-wallets have also gained popularity in Nepal in recent years. An e-wallet is a digital wallet that stores users' payment information, such as credit and debit card details, and allows them to make purchases and payments online. E-sewa , Khalti , and  IME Pay are some of the popular e-wallets in Nepal. These e-wallets can be used to pay utility bills, buy movie tickets, and make online purchases.

The adoption of digital payment methods in Nepal has had a positive impact on the country's economy. It has helped to increase financial inclusion and reduce the reliance on cash transactions. Digital payments have also helped to increase the efficiency of financial transactions, reduce costs, and improve the speed of transactions. This has made it easier for businesses to operate and for people to conduct their daily transactions.

In conclusion, digital payment methods have gained popularity in Nepal in recent years. Mobile banking, internet banking, and e-wallets are some of the popular digital payment methods in Nepal. The adoption of these payment methods has had a positive impact on the country's economy, increasing financial inclusion and reducing the reliance on cash transactions. The government and the central bank should continue to promote digital payments to further increase their adoption in the country.

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Factors Affecting the Adoption of Digital Payment Systems

Payment for goods and services in Nepal is characterized by long queues; long distance traveling and time wasting that generally affect business activities and ultimately economic development. Settling utility bills, payment for goods and services, and money transfers has been a major headache for individual and firms in Nepal resulting in declined business activities and huge debt to most of the utility providers. In fact, the country have not yet realize the full benefits of the technological advances in electronic payment such as the use of cards, automated teller machines (ATM), the Internet, mobile phones, and other devices. To identify factors that influence the acceptance of these payment systems a theoretical extension of the Technology Acceptance Model, Theory of Planned Behaviour and Trust was used to evaluate the factors that influence the adoption and acceptance of the information technology and system of Internet; in the e-Finance sector in Nepal, especially in digital ...

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Digital payments double to Rs1.22 trillion in first quarter

Krishana Prasain

Nepal’s digital payment platforms saw a 94 percent year-on-year jump in business in the first quarter as consumers took to paying online for daily essentials at local stores besides premium products.

Digital payment refers to contactless transactions made via online methods as opposed to cash payments made physically.

According to Nepal Rastra Bank, the country’s central bank, digital payments almost doubled in the first quarter of the current fiscal year, started mid-July 2021, mainly due to an increase in the number of people adapting to online payment.

Turnover in the first three-month period (mid-July to mid-October) reached Rs1.22 trillion compared to Rs630.85 billion in the same period in the last fiscal year.

According to the central bank, digital payment platforms saw the highest monthly turnover of Rs470.51 billion between mid-September and mid-October, coinciding with the festival shopping season.

During the same period in the last fiscal year, online payments totalled Rs256.39 billion.

Digital payments in the first month of the fiscal year (mid-July to mid-August) amounted to Rs361.20 billion, which increased to Rs392 billion in the second month (mid-August to mid-September).

The number of transactions also swelled greatly, reaching 54.12 million transactions in the first three months of the current fiscal year, up from 34.23 million transactions in the same period in the last fiscal year.

The national payment switch opened on November 18 which, industry insiders say, will see digital transactions take a great leap forward.

A breakdown by online payment platforms shows that 1.28 million transactions worth Rs200 billion were made through the Interbank Payment System (IPS) during the monthlong period from mid-September to mid-October.

The figure represents a sharp drop from the Rs234.49 billion recorded in the same period in the last fiscal year. The IPS transfers funds from one account to another at any of the participating member banks and financial institutions.

Wallet transactions during the period mid-September to mid-October amounted to 13.56 million with a total value of Rs15.18 billion, an increase from the Rs9.88 billion recorded during the same period in the last fiscal year.

According to the central bank, quick response (QR) code-based payments during the period mid-September to mid-October rose sharply to Rs6 billion from Rs969 million previously.

Electronic transfer of funds at point of sale (retail transactions) also swelled to Rs4.84 billion in the review period from Rs2.34 billion previously.

E-commerce transactions made during the period mid-September to mid-October using cards dropped to Rs455 million from Rs794 million in the same period in the last fiscal year.

Despite the rise in digital transactions, Nepal still has a long way to go to achieve a cashless society, stakeholders say. Electronic funds transfer is being seen as the way of the future due to its transparency and reduced operation costs.

At a recent discussion on the e-commerce ecosystem, Mahesh Sharma Dhakal, senior deputy chief executive officer of Global IME Bank, told the Post that to encourage people to go for digital payment, the government should subsidise charges on transactions or charge a minimum amount.

According to Dev Kumar Dhakal, spokesperson for Nepal Rastra Bank, there are problems in interoperability systems while making online transactions through QR or wallet transactions as all banks and financial institutions are not linked to one service provider.

“We have been working on making infrastructure for digital payment, and awareness and transactions using the existing infrastructure that support the transaction are increasing,” he said.

"As people’s attraction towards easy and secure payment systems is rising, the volume of transactions has also been rising," Dhakal said, adding that online transactions would increase in the coming days.

The central bank has been working on the promotion of digital wallet since the starting days of its introduction to increase the number of digital transactions.

“If we started moving to a less cash society, the percentage of cash transactions will decrease while the digital transaction volume will increase,” Dhakal said.

Industry insiders say that poor internet service and higher data charges discourage people from using digital services whether online payment or online shopping.

According to the Connectivity in the Least Developed Countries Status Report, a Nepali has to spend 2.6 percent of the gross annual income to buy internet service, which puts Nepal behind India, Sri Lanka and Pakistan in affordable digital access where the cost is less than 1 percent.

As per the International Telecommunication Union, broadband service in the developing countries should not cost more than 2 percent of the gross national income per capita.

People have been complaining about slow internet connections too.

Internet penetration as of mid-October was 113.57 percent of the total population where mobile broadband accounted for 84.63 percent and fixed broadband (wired) accounted for 28.28 percent of the subscriptions, according to a management and information system report published by Nepal Telecommunications Authority. 

Krishana Prasain Krishana Prasain is a business reporter for The Kathmandu Post covering markets. Before joining The Kathmandu Post in 2018, she spent 3 years in New Business Age magazine covering business.

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Adoption of Digital Payment in Nepal: An Overview

by Samir Bhatta | Dec 19, 2021 | Fintech Trends | 0 comments

Digital payment is the transfer of value from one payment account to another using digital devices such as a mobile phone, POS, a computer or a digital channel. In Nepal, popular means of digital payment are Digital wallets and payment Gateway, e-banking, mobile banking, plastic cards, Automated Teller Machines, Point of Sales Machines and many more. Digital payment today has become a part of day- to-day life for most people in Nepal. 

Digital payment in Nepal does not have a long history. It dates back to the early 1990’s when Nabil bank introduced credit cards. Few other banks like Himalayan Bank, Kumari Bank and Laxmi bank gave the phenomena a push by adding services related to it.

 Later on with the increasing accessibility of the internet in Nepal, people are starting to use more digital payments. It is not surprising that Nepal has been adopting the technologies, being an open economy. So we can conclude the increment of digital payments and digital payment services is a part of globalization. Today  all digital wallets like Khalti, IME Pay, eSewa and others  have become more trendy. They are more user friendly and convenient to pay any online utility bill  payment , domestic Flight booking , online Recharge and Top Up , online movie booking and many more. 

People have become more familiar with digital payments after Covid-19 as the rules for social distancing have been implemented. Due to the fear of infection people avoided staying in queue to pay the bills and shop physically. As an alternative to that, they have found online payments, and online shopping more convenient, secure and time saving.

Looking at the statistics, 10.15 million out of around 30.25 million account holders are using mobile banking services whereas internet penetration in Nepal is approx. 21.4% of population. Similarly, digital payments amounted to 40% of online sales post COVID. This shows the number of digital payments has increased by almost double post covid. 

Digital Wallets are definitely the trendiest of all now, because of its flexibility, security, convenience, and widespread availability. In terms of Nepal, e-wallets have reduced geographical barriers for financial transactions for people in remote areas, and given them value of time. It implies equally in the urban population too as people have a limited time frame and with a wide range of services from e-wallets a consumer can save a lot of time and be more productive and efficient. 

Khalti  Digital Wallet and Payment Gateway has been a part of this revolution. Starting its journey from 2017 with a small investment to growing as a big corporate house in 2021, within a few years it has contributed a lot for the digital payment industry in Nepal. With a user base of more than 2 Million, Khalti is one of the prominent companies in the industry. 

You can easily book your Flight, pay insurance premium , Utility bills, Top-up and transfer and receive your amount easily with Khalti. Grab flat  cashback up to Rs.100 on your every first transaction by using Coupon Code.

Also read: Khalti मा iPhone 13 साथै दैनिक १ लाख Khalti Points – मात्र रु. 50 मा जित्ने हैन त?

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Table of Contents

In recent years, Nepal has seen a surge in digital payments, with the adoption of technology becoming more and more prevalent in everyday life. With the introduction of new payment technologies and the ongoing growth of e-commerce, it is clear that digital payments are the future of transactions in Nepal. Digital payments offer a more efficient and secure way to conduct transactions and are becoming increasingly popular with consumers, businesses, and government organizations alike. This blog will examine the current state of digital payments in Nepal, their potential, the government’s initiatives to promote digital payments, innovations and the future of digital payments in Nepal. By the end of this blog, readers will gain insight into the current trends and future prospects of digital payments in Nepal.

Current State of Digital Payments in Nepal

The digital payments landscape in Nepal is still in its early stages. However, in recent years, the adoption of digital payments has increased steadily, driven by the growth of e-commerce and the emergence of new payment technologies. Mobile banking and digital wallets have become increasingly popular in Nepal, providing a convenient and secure way to conduct transactions.

Currently, there are a number of digital payment service providers in Nepal, including eSewa, Khalti, IME Pay, Fonepay, and ConnectIPS, among others. These providers offer a range of services, including bill payments, money transfers, and online purchases.

However, despite the growth of digital payments in Nepal, there are still several challenges that need to be addressed. One of the major challenges is the lack of awareness and trust among consumers. Many people in Nepal are still skeptical of digital payments and prefer cash-based transactions. Additionally, there are still many areas in Nepal where access to digital payments is limited due to inadequate infrastructure and low levels of financial literacy.

Another challenge is the lack of interoperability between different digital payment systems. This means that consumers often need to have multiple accounts with different providers to access different services, which can be confusing and inconvenient.

Overall, while the adoption of digital payments in Nepal is still in its early stages, there is significant potential for growth in this sector. As more people become aware of the benefits of digital payments and infrastructure improves, the adoption of digital payments is likely to increase significantly in Nepal.

Potential of Digital Payments in Nepal

Digital payments offer several advantages over traditional cash-based transactions, making them an attractive option for consumers, businesses, and government organizations in Nepal. One of the main advantages of digital payments is their convenience. Digital payments can be made from anywhere at any time, making them a more efficient and time-saving option compared to traditional payment methods.

Digital payments are also more secure than cash-based transactions, as they are protected by advanced encryption and security protocols. This helps to prevent fraud and other forms of financial crime, which can be a major concern in Nepal.

In addition, digital payments offer a more efficient and transparent way to conduct transactions, making it easier for businesses to manage their finances and for government organizations to track payments and manage public funds. This can help to reduce corruption and promote greater accountability in the financial sector.

The growth potential of digital payments in Nepal is also significant. With a young and tech-savvy population, there is a growing demand for digital payment services in Nepal. Additionally, the increasing availability of smartphones and internet connectivity is making it easier for people to access digital payment services.

Currently, there are several trends driving the growth of digital payments in Nepal. One trend is the rise of e-commerce, which is driving demand for secure and convenient payment options. Another trend is the increasing popularity of mobile banking, which is allowing more people in Nepal to access financial services through their mobile devices.

Government Initiatives to Promote Digital Payments

The government of Nepal has taken several initiatives to promote the adoption of digital payments in the country. One of the key initiatives is the launch of the National Payment Gateway (NPG) project, which aims to create a single platform for all digital payments in Nepal. The NPG project will allow consumers to make payments using any digital payment system, regardless of the service provider. This will help to promote interoperability between different digital payment systems, making it easier and more convenient for consumers to use digital payments.

The government has also launched several other initiatives to promote digital payments, including the introduction of digital payment guidelines for government transactions, the establishment of a Payment System Oversight Office (PSOO) to regulate the digital payment sector, and the launch of financial literacy programs to educate the public about the benefits of digital payments.

In addition, the government has introduced several policies to promote the use of digital payments in specific sectors, such as the mandatory use of digital payments for tax payments and the promotion of digital payments in the tourism industry.

These initiatives have had a positive impact on the adoption of digital payments in Nepal, with many consumers and businesses now using digital payment services for their transactions. However, there is still a long way to go, and the government will need to continue to promote digital payments and address the challenges facing the sector in order to realize the full potential of digital payments in Nepal.

Innovations and Future of Digital Payments in Nepal

The future of digital payments in Nepal is exciting, with many innovations and new technologies on the horizon. One of the key innovations is the use of blockchain technology to create more secure and transparent digital payment systems. Blockchain technology can help to prevent fraud and increase transparency in financial transactions, making it an attractive option for businesses and government organizations in Nepal.

Another innovation that is gaining popularity in Nepal is the use of biometric authentication for digital payments. Biometric authentication uses unique physical characteristics such as fingerprints, facial recognition, or iris scans to verify the identity of the user. This technology can help to improve the security of digital payments and prevent fraud.

The use of mobile payments is also likely to increase in Nepal, with more people accessing digital payment services through their mobile devices. This will make it easier and more convenient for people to conduct transactions, especially in rural areas where access to traditional banking services is limited.

The growth of e-commerce is also likely to drive the adoption of digital payments in Nepal, with more businesses accepting online payments for their goods and services. This will help to create a more efficient and transparent market, making it easier for consumers to access products and services from anywhere in the country.

Overall, the future of digital payments in Nepal is bright, with significant potential for growth and innovation. As more people become aware of the benefits of digital payments and infrastructure improves, the adoption of digital payments is likely to increase significantly in Nepal. The government and private sector will need to continue to work together to promote digital payments and address the challenges facing the sector, in order to realize the full potential of digital payments in Nepal.

In conclusion, the future of digital payments in Nepal is promising, with significant potential for growth and innovation. The current state of digital payments in Nepal is improving, with the government taking several initiatives to promote the adoption of digital payments and the private sector investing in new technologies and innovations.

The potential of digital payments in Nepal is significant, with benefits such as convenience, security, efficiency, and transparency. The growth of e-commerce, mobile payments, and blockchain technology are likely to drive the adoption of digital payments in Nepal, making it easier and more convenient for people to conduct transactions.

However, there are still challenges facing the digital payment sector in Nepal, such as the lack of infrastructure, low levels of financial literacy, and the need for greater interoperability between different digital payment systems. To realize the full potential of digital payments in Nepal, the government and private sector will need to continue to work together to promote digital payments and address these challenges.

Overall, the future of digital payments in Nepal is bright, and the adoption of digital payments is likely to increase significantly in the coming years. With the right investments in infrastructure and technology, digital payments have the potential to transform the way people conduct transactions and promote greater financial inclusion and transparency in Nepal.

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Digital Payments - Nepal

• Total transaction value in the Digital Payments market is projected to reach US$3,621.00m in 2024.
• Total transaction value is expected to show an annual growth rate (CAGR 2024-2028) of 13.95% resulting in a projected total amount of US$6,105.00m by 2028.
• The market's largest market is Digital Commerce with a projected total transaction value of US$2,322.00m in 2024.
• From a global comparison perspective it is shown that the highest cumulated transaction value is reached in China (US$3,744.00bn in 2024).

Key regions: Japan , Germany , Brazil , United States , Asia

Definition:

Additional Information:

• Online processed payment transactions
• Mobile POS payments processed via smart devices at point of sale
• Digital consumer commerce transactions (e.g. credit card, online payment providers)
• Online cross-border payments and remittance sending)

out-of-scope

• mPOS solutions (dongle payments) for card payments or mobile card readers
• Business to business payments
• Electronic banking (eBanking)
• Provision fees from payment providers
• Payments via social networks
• Domestic payments and bill splitting services
• Cross-border payments via traditional service providers (banks, post offices & Western Union, MoneyGram)
• Digital Commerce
• Mobile POS Payments
• Digital Remittances
• Crowdlending (Business)
• Crowdfunding
• Marketplace Lending (Consumer)
• Crowdinvesting
• Robo-Advisors
• Cryptocurrencies
• Analyst Opinion

The digital payments market is currently experiencing a surge in growth, driven by the increasing adoption of e-commerce and mobile payments, as well as the rise of contactless payments due to the COVID-19 pandemic. Digital wallets and mobile payment apps such as PayPal, Venmo, and Cash App have become increasingly popular among consumers, allowing for seamless and secure transactions. Additionally, the growth of fintech startups and the integration of blockchain technology into payment systems have contributed to the expansion of the digital payments market. Several factors are driving the growth of the digital payments market. Firstly, the convenience and speed of digital payments have made them a preferred method of payment for consumers, particularly among younger generations. Secondly, the increasing digitization of businesses has led to a growing demand for digital payment solutions that can streamline transactions and reduce costs. Thirdly, the rise of e-commerce and online marketplaces has increased the need for secure and efficient payment systems that can facilitate cross-border transactions. Finally, the COVID-19 pandemic has accelerated the adoption of contactless payments as consumers and businesses prioritize safety and hygiene. The global digital payments market is projected to grow at to have a postive growth in the coming years. The Asia-Pacific region is expected to dominate the market, followed by North America and Europe, owing to the increasing adoption of digital payments in these regions. The rising number of partnerships and collaborations among payment service providers and the implementation of advanced technologies such as blockchain and artificial intelligence are also expected to drive market growth in the coming years.

• Methodology

Data coverage:

Modeling approach / Market size:

Additional notes:

• Transaction Value
• Global Comparison
• Key Market Indicators

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Digital payment on rise in Nepal

With growing access to technology, digital payment is on rise in Nepal of late.

The digital transaction which gained much pace during the COVID pandemic has continued to rise till date. Nepal Rastra Bank (NRB) has also encouraged people for the electronic payment.

The latest record shared by NRB has shown that in the second month (Bhadra) of the current fiscal year alone, transactions of more than Rs 4900 billion were made via electronic medium.

The transaction of Rs 292 billion was made via Connect IPS. In the same period last year, the transaction of Rs 232 billion was done.

Similarly, the mobile banking in this month stands at Rs 146 billion. In the same period last year, it was Rs 74.32 billion.

Digital wallet transactions amounted to Rs 17.63 billion , while it was Rs 14.42 billion in the same month last year.

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Essay On Digital Payment System In Nepal

Digital payment systems have become a game-changer in Nepal, transforming the way people conduct financial transactions. With the rise of smartphones and Internet access, digital payment options such as mobile wallets, internet banking, and online payment gateways have gained popularity.

The growth of digital payment systems in Nepal has been remarkable, with banks and other financial institutions offering innovative solutions to cater to the increasing demand. These platforms have made financial transactions quick, easy, and efficient, allowing people to send and receive money, pay bills, recharge mobile phones, and make online purchases with just a few taps on their smartphones.

The impact of digital payment systems in Nepal has been far-reaching. They have increased financial inclusion by providing access to financial services for the unbanked and underbanked populations. They have also fostered the formalization of the economy by making transactions transparent and traceable, helping the government and regulatory authorities to better monitor and regulate financial transactions.

Despite the positive impact, digital payment systems in Nepal face challenges such as low financial literacy, limited internet access, and security concerns. Many people, especially in rural areas, lack awareness and understanding of digital payment systems, and issues such as cyber threats and fraud are concerns that need to be addressed.

However, the future prospects of digital payment systems in Nepal look promising. The government and regulatory authorities are taking measures to promote digital payments and foster financial inclusion. Initiatives such as the National Payment Gateway aim to integrate all digital payment platforms and enable interoperability, while collaborations between financial institutions, mobile network operators, and technology companies are expected to spur innovation.

In conclusion, digital payment systems have revolutionized financial transactions in Nepal, offering convenience, accessibility, and transparency. Despite challenges, they are gaining high expectations and are expected to be vital in driving financial inclusion and formalizing the economy. Addressing issues such as financial literacy, internet access, and security concerns will be crucial to ensure the continued success of digital payment systems in Nepal.

Also Read:  eSewa: Nepal's Leading Digital Wallet and Payment Gateway

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