Nepal permits QR code payment in India and Bhutan
- In Reports
- 08:35 PM, Jun 28, 2024
- Myind Staff
Three months after Indian citizens were permitted to make payments via their mobile phones in Nepal, Nepal Rastra Bank announced on June 27th that Nepali citizens can now use a quick response (QR) code payment system in India. In a circular issued on the same day, Nepal Rastra Bank authorised merchant payments using QR codes and other payment methods such as e-banking, interbank payments, and mobile banking in both India and Bhutan.
Nepal Rastra Bank has set the daily transaction limit for merchant payments at Rs 15,000 or Rs 100,000 per month. This applies to payments made by Nepali citizens to merchants in India, specifically for goods and services. The central bank's recent circular also allows for similar payments in Bhutan.
Following this regulatory update, Nepali payment system operators are preparing to launch these services in India soon. Additionally, Nepal Rastra Bank has mandated that Nepali companies engaged in digital cross-border payment systems must obtain prior approval from the central bank before entering into agreements or signing memoranda of understanding with foreign partners. This regulatory framework aims to manage and facilitate secure cross-border transactions while ensuring compliance with national financial regulations.
"We were initially allowed to receive payments from Indian citizens using QR codes in Nepal. Now, with the new provision, banking and financial institutions associated with Fonepay can enable payments using QR codes through their mobile banking apps in India," explained Paras Kunwar, Chief Operating Officer (COO) of Fonepay. "We are on track to soon offer this service for Nepalis in India. Apart from some minor documentation, we are technically prepared," Kunwar added.
Starting from March 1, Indian citizens were granted the ability to make payments through their mobile phones in Nepal, marking a significant step forward in cross-border digital payments between Nepal and India. This development particularly benefits students and individuals traveling to India for medical purposes. Fonepay Payment Service in Nepal has partnered with India's NPCI International Payments to launch the cross-border payment service using QR codes. This collaboration aims to facilitate convenient and secure transactions between the two countries.
According to officials, Nepal's central bank has introduced a retail payment switch to facilitate person-to-person transactions within the country. Nepal Clearing House, a public limited company, is authorised to operate through this retail payment switch.
Due to delays in implementing the National Payment Switch, the central bank has provisioned a retail switch specifically for inter-country payments using a QR code system. On March 15, Nepal Rastra Bank amended guidelines for inter-country payments through QR codes, introducing a provision that allows Indian workers in Nepal, who hold accounts in Nepali banks, to send money to Indian banks and financial institutions using e-banking, interbank payments, mobile banking, and QR codes through the national payment switch. This regulatory update aims to streamline and enhance cross-border payment services, ensuring more efficient and accessible transactions between Nepal and India.
A recent circular published by Nepal Rastra Bank outlines provisions for sending money through the retail payment switch until the national payment switch becomes fully operational. This decision comes amid delays in finalising the national payment switch, which serves as crucial infrastructure for routing and settling retail transactions within Nepal. Under the current arrangement, the central bank has established limits of INR 15,000 per day or INR 100,000 per month for person-to-person (P2P) transfers. These transfers involve electronic money transfers between individuals using an intermediary platform.
Laxmi Prasad Prasai, director of Nepal Rastra Bank’s payment department, acknowledged that the national payment switch may take longer to be fully operational. He emphasised that once completed, the national payment switch will integrate and streamline the routing and settlement of retail transactions, ensuring interoperability across various payment methods within Nepal. This infrastructure includes a retail payment switch dedicated to managing non-card-based retail transactions and instruments.
The retail payment switch in Nepal is an advanced real-time system designed to facilitate various types of retail transactions efficiently. It supports virtual private address-based payments, request-to-pay pull transactions, interoperable QR code payments, biller gateways, wallet interoperability, and settlement operations for payment system operators.
Currently, efforts are underway to implement card switches and domestic card schemes within this framework. Regarding remittances from India to Nepal under the 'Indo-Nepal Remittance Facility Scheme', Nepali citizens holding accounts in Indian banks and financial institutions can send remittances to Nepal using e-banking, interbank payments, mobile banking, and QR codes through the retail payment switch. This setup aims to streamline cross-border transactions, providing a secure and accessible channel for financial transfers between the two countries.
Under the new guidelines issued, remittances sent from India to Nepal will be received in Nepali currency directly into the beneficiaries' bank accounts or e-wallets. This update aims to streamline the process and ensure that recipients can access their funds conveniently and securely. Nepal Rastra Bank's circular emphasises that banking and financial institutions, as well as payment service providers, must mitigate risks and enhance the benefits of digital transactions. This directive underscores the importance of secure and efficient digital payment systems in Nepal.
Additionally, the amended guidelines now allow Nepali traders to accept payments for the sale of goods and services through QR codes and other digital payment methods using Indian payment instruments. This initiative is geared towards facilitating smoother transactions and fostering economic exchanges between Nepal and India.
Moreover, Nepal's central bank has extended its digital payment system to include transactions with third countries, enabling foreign citizens to make purchases in Nepal using QR codes and other digital payment modes. This expansion aims to promote tourism and trade by enhancing payment options for international visitors in Nepal.
Image Source: Money Mitra
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