The ball lies in the government’s court to come up with appropriate policies to foster a vibrant digital payment ecosystem.

--BY  ASHIM NEUPANE

At a time when the number of new digital payment systems is rising in Nepal, Cellcom Pvt Ltd, an IMS Group company, introduced CellPay on July 31 announcing a range of new features. What sets it apart from the existing e-payment gateways, according to Pawan Pradhan, managing director at Cellcom, is that CellPay is not a digital wallet where users are required to load money in the account to make payments as the bank accounts of the users will be directly debited after transactions. “Unlike other existing e-payment systems, CellPay subscribers will receive interest on transactions and can use multiple bank accounts for payments.

Similarly, registration of payment recipients is not required and users need not repeat their bank account numbers for transfer of funds each time they use the service,” he says. CellPay, which partnered with 11 banks and financial institutions (BFIs) prior to its launch, has planned to tie up with another 10 banks soon, according to Pradhan.

A  Competition
Led by the exponential growth of smartphones and internet connectivity, Nepalis are increasing becoming tech-savvy which has opened lucrative doors of opportunities for e-payment companies in recent years. Currently, there are over a dozen e-payment gateways in the country providing different services such as payment of bills and fund transfer through their mobile applications and websites. It is estimated that more than three million Nepalis use digital wallet services. Currently, eSewa, Khalti, IME Pay, QPay and Prabhu Pay are among the major players in the e-payment sphere. Similarly, e-pay, i-Pay, E-dheba, DigiPay, EnetPay, Hello Paisa, and Nepzy are also vying for a slice of the pie.

Launched as Nepal’s first e-payment and digital wallet platform in 2009, eSewa undisputedly leads the market race with more than two million subscribers, 25,000 merchant accounts, and the number of its active users, who use the app once a month, stands at 400,000. According to Subash Sharma, CEO at F1 Soft International, the number eSewa subscribers has increased at a rate of 100 percent annually since 2014. “Before 2014, eSewa had only around 20,000 customers, and the number of active users was almost 5,000. With increment in internet penetration, the number of users started to grow at a healthy rate,” he says.

According to Sharma, 20 percent of mobile balance top-ups and 20 percent of Nepal Electricity Authority (NEA) bills are paid through the eSewa platform. It has been collecting more than Rs 10 million per day from its more than 10,000 subscribers for NEA bill payments. It has already built a network of more than 50,000 agents across the country and has partnered with 58 banks and financial institutions (BFIs).

The last few years has seen Khalti coming up as another major player in the online payment and digital wallet business.  Amit Agrawal, co-founder and director at Khalti observes a rising level of awareness among Nepalis about e-payment and digital wallet services lately. “With more wallet companies joining the fray, people also will become more aware about the digital modes of payment,” he says. Currently, Khalti has a total of 900,000 subscribers, of which, 100,000 are active users who use the mobile app at least once every 90 days. Khalti has joined hands with 40 BFIs. “Khalti is growing slowly but steadily, and the overall growth in the last two years has been satisfactory for the company,” mentions Agrawal.  According to him, its user base has been growing over a rate of 20 percent per month.

Currently, the competition between digital payment services is mostly concentrated in the Kathmandu Valley and urban areas of the country.  With the market getting bigger, service providers are looking to expand their activities to the rural areas.  According to Sharma, Esewa is working with cooperatives in several rural parts of the country to provide easy financial services to the residents of such areas, while Pradhan of CellPay claims that even the subscribers in the rural parts of the country can access its financial services easily.  “As CellPay accounts of subscribers are directly linked to their bank accounts, users don’t have to go the agents to top-up the accounts,” says Pradhan says, adding that through the platform subscribers can also enjoy fund transfers to BFIs in real time.

This competition has led the service providers to come up with several schemes to attract customers. The concept of reward points has become one of the most popular tools in this respect whereby subscribers of online payments and digital wallets can get such points by using the services. At present, Esewa has been more aggressive in this area by giving frequent users of its services more reward points. The points can be redeemed for gifts. Similarly, major online payment and digital wallets have been using ‘refer and earn’ as another reward system under which subscribers get cash rewards for referring the services to their friends and families. F1Soft CEO Sharma claims that the company’s introduction of cash points for wallet top-ups has increased the popularity of Esewa among the rural subscribers.  

Making it More Convenient
E-payment and digital wallet companies are incorporating new systems into their services in order to make electronic payment and fund transfers more convenient. “CellPay has already tied up with 600 retailers, where subscribers can pay their bills by scanning the QR code or by directly transferring funds to the merchant’s account,” informs Pradhan.

Also, eSewa has launched Fonepay – a digital payment processor – that connects consumers, banks and merchants in an interoperable network to facilitate mobile/digital payments. It is a network through which customers can make payments to eSewa’s partner merchants by just scanning a QR code. Currently, Fonepay has 3,000 partner merchants and it is also planning to enter rural parts of the nation by tying up with around 100,000 merchants.
 
To Create a Cashless Society
While the government wants to move towards a mainly cashless society, the reality is that there is still a very, very long way to go. The fact that more than 95 percent of country’s total transaction involves cash is a stark reminder that much needs to be done to foster a favourable ecosystem. The people at the bureaucratic level as well as the central banking authority must look at digital payment systems in a broad way, say entrepreneurs. Sharma of F1Soft says that the government has been looking at digital wallets only as a means to pay utility bills and to top-up mobile SIM recharge. “Digital wallet is beyond mobile top-ups and utility bill payments. The wallets can be an alternative to some banking services particularly in the rural parts of the country,” mentions Sharma.

Of late, it seems that the government has realised the importance of e-payment and digital wallets to some extent.  In the budget speech for the fiscal year 2019/20, finance minister Dr Yuba Raj Khatiwada announced that 10 percent of the total VAT paid by the consumers making payments using digital wallets and online systems will be refunded directly to their bank accounts. The policy is yet to come into effect as the Ministry of Finance and other authorities concerned are looking ways to implement it. Sharma of F1Soft sees this policy initiative as a step in the right direction. Agrawal of Khalti stresses on the need for a collaborative effort between all stakeholders to promote digital payment systems in the country. “Wallet companies have been trying their best. Now, the government should also digititalise its systems which will help to create a better ecosystem,” opines Agrawal.