June 30: Nepalis, who are paying payment gateways fees to international companies for digital transactions, will soon be relieved from paying additional fees to payment services providers including Visa for digital transactions soon.
The process to establish national payment gateway by the Nepal Rastra Bank (NRB) has reached final stage. According to NRB official the gateway will be used for payments related to the government’s tax collection and services in the beginning. Banks and financial institutions (BFIs), however, will need the National Payment Switch for banking transactions.
NRB and National Information Technology Center (NITC) have already bought the gateway, but this is yet to come into operation. Subash Ghimire, director of Payment Systems Department of NRB said that the card used in financial institution would not be useable for the payment gateway. According to him, National Payment Gateway and National Payment Switch are two different technologies and National Payment Switch is required for banking transactions. “The gateway will be used only for tax collection in the beginning,” said Ghimire.
As the payment gateway will only include government payment, preparations are underway to incorporate establishment of the National Payment Switch in the Monetary Policy for FY2020/21. After the Payment Switch comes into operation country’s own card can be introduced and this will be cost effective. Currently, Nepal’s banks are providing payment services of debit and credit cards through international switch.
The budget for current fiscal year has also announced to make the payment systems safe, advanced and electronic. With expansion of services like branchless banking, mobile banking and internet banking, government focus has been in encouraging cashless transaction.
According to NRB’s Payment Systems Department Director Ghimire, banks have been demanding an international standard payment switch.
Due to lack of switching system, banks are required to maintain payment switch on their own or use international institutions like American Express. “This will contribute to a decrease in paper works, reduce price for transaction and promoting digitisation,” said Bhuwan Dahal, president of the Nepal Bankers’ Association. “Also, the risk of network hacking will be lower for banks.”
Due to the lockdown, banks have waived fees for inter-banking transactions leading to an increase in digital transactions. Bankers say the number of transactions will decline after they start charging for digital payments.
Currently, Nepal Electronic Payment System (NEPS) has been providing switch facility to 16 banks. Similarly, Nepal Clearing House (NCHL) has also been facilitating with digital transaction with its systems like Connect IPS and RTGS.