November 24: Nepal Clearing House Limited (NCHL) has started initial phase of work for developing the National Payment Switch as per the understanding reached with the central bank in this regard.
NCHL informed that it is making necessary preparations for inter-bank card settlement in the first phase.
The company said that it is currently conducting study for developing the National Payment Switch but hasn’t started technical works yet.
CEO of NCHL Nilesn Man Singh Pradhan informed New Business Age that they are currently studying the modus operandi of the national payment switches of neighbouring countries like India, Sri Lanka and Bangladesh.
“After the study is complete, we will develop a national payment switch which is best suited for Nepal considering the technological advancement of the country and the requirement of businesses and volume of transaction,” said Pradhan.
“We don’t have transactions as big as that of India. So we will use a system that is suitable for us,” he added.
CEO Pradhan said that the project is one of the big projects of the country and cannot specifically say when it will be completed.
He argues that such switch is categorized under long-term projects in foreign countries. Pradhan added that they will first identify the components which they require urgently and work towards setting them up in phase-wise manner.
“In the first phase, we will ensure inter-bank card settlement,” said Pradhan.
At present, the central bank has instructed commercial banks not to charge customers for inter-bank ATM transaction. As Nepal does not have its own payment switch, the banks have been forced pay a minimum of Rs 12 for such transaction to foreign developers. BFIs have been paying hefty amount to international payment gateways like Visa and Master Card because the country lacks its own national payment gateway.
Banks of Nepal have been making payment for transactions through debit and credit cards by using payment switches of foreign countries.
The country has been spending lots of money to foreign banks for the payments made through point of sales machines placed at shopping malls across the country.
In this context, a national payment switch is expected to reduce the cost of the banks to a great extent.