India-Nepal digital payment gateway likely to start from Feb: Indian Envoy

The digital payment gateway between India and Nepal is expected to start in the first phase from the end of February 2024, Indian Ambassador Naveen Srivastava announced on Friday.

Ambassador Srivastava made the announcement referring to the agreement between NPCI and NCHL, which was signed during the visit of Nepali PM Pushpa Kamal Dahal to India earlier this year.

"Fintech is a revolution that is happening all across the world and particularly in India. You might have heard about Unified Payment Interface (UPI), how India to date is the leading country in the world in terms of digital payments and it beats other countries by far. This fintech revolution provides an avenue for further collaboration between India and Nepal," Srivastava said on Friday.

He added, "We've already undertaken this journey, the Ru-pay card was launched last year in Nepal and ambassador (Manjeev Singh) Puri was instrumental in initiating that process. We taking it further taking support of Governor (Maha Prasad) Adhikari and the Finance Minister earlier this year when PM Prachanda visited India NPCI (National Payments Corporation of India) and Nepal Clearing House (Limited) and signed an MoU to start and implement digital cross border payment.".

The Indian envoy affirmed hope that by the end of February 2024 end, the NPCI and NCHL payment system will start, which will allow people to people cross-border payments on an instant basis.

Ambassador Srivastava made the address during the inaugural session of Nepal BFSI (Banking, Financial Service and Insurance Summit) organized by the India-Nepal Center of the PHD Chamber of Commerce and Industry (PHDCCI) on Friday.

Earlier in June, the NPCI International Payments Limited (NIPL) and Nepal Clearing House Limited (NCHL) had joined hands to facilitate cross-border digital payments between India and Nepal by integrating the Unified Payments Interface (UPI) of India and National Payments Interface (NPI) of Nepal.

During Nepali PM Pushpa Kamal Dahal's visit to India, an MoU was exchanged between NIPL and NCHL at Hyderabad House, New Delhi. As per the MoU, both bodies intend to establish cross-border connectivity for financial transactions between the two countries to ease fund transfers and merchant payments by users.

The initial engagement was for inward and outward transfers between the banks in India and Nepal which will be achieved by integration between UPI of India and NPI of Nepal to enable existing instruments for cross-border transactions, which will be subsequently extended for other merchant payments.

Addressing the summit, Nepal Finance Minister Prakash Sharan Mahat also highlighted the importance of cross-border payment with India and called on regional authorities of South Asia to cooperate further.

"Cooperation at the regional level is very important; especially cooperation between Nepal and India along with South Asian countries is very crucial and very important. Because we have huge trade relation between Nepal and India and it also is growing with Bangladesh. Utilization of technology, and financial services and learning from the examples set forth by each other, the cost of doing business and the cost of the transaction would go down. Therefore, I urge respective authorities from this region to cooperate closely," he said.

Designated by the Nepal government, the Nepal Clearing House Limited (NCHL) has a 10 per cent investment from Nepal Rastra Bank -- the Central Bank of Nepal and 90 per cent from other different commercial banks.

The central bank earlier had handed the work of establishing and operating a national payment switch and operating a national payment card to NCHL. Last May, payment system operator Gateway Payment Service began a cross-border payment system for the first time in Nepal, based on interoperable and mobile-first technology.

The National Payment Corporation of India and its international arm International Payments had joined hands with Gateway Payment Service and Manam Infotech to deploy the UPI system in Nepal. The unified payment interface is a real-time payment system that provides person-to-person and person-to-merchant transactions simply, safely and securely in India.

Maha Prasad Adhikari, the Governor of Nepal Rastra Bank (NRB) -- the central bank of Nepal -- said that India and Nepal are working to intricate the payment system between the two countries.

"Recently, Nepal and India have signed to intricate the payment system between the Unified Payment Interface and PCI (Payments Council of India) of India and NPI, NCHL of Nepal to foster digital payment between Nepal and India. To benefit from the simplicity of small value payment through such digital means there is a number of interests being shown to further enhance this cross-border mode of digital payment to another country,".

With the introduction of the first phase payment gateway between India and Nepal, it would come as an ease for Indian tourists to visit Nepal as the Himalayan nation has banned Indian denominations above 100 (INR).

Also, the new system will enable payments for larger digital goods and boost interoperable real-time person-to-person (P2P) and merchant payment transactions (P2M).

India's former Ambassador to Nepal, Manjeev Singh Puri, who now chairs the India-Nepal PHDCCI also remarked that Indian fintech companies can facilitate in course of advancing digital payment between nations.

"The developments in India in the financial services sector-especially digital but also the fintech-which is the use of data, has been absolutely phenomenal. I am sure in the private capacity many people are taking advantage of availing services from some Indian companies; some of your companies also perhaps doing it but the thought that I would leave with the leadership of the financial technical sector is that- use this opportunity to know India.

"Indian companies have huge sense of comfort in dealing with Nepal. Please use the newly developed expertise that they have on dealing with data, through fintech and its enablers, through the business of entire digital because I think it can be a game changer for the economy that Nepal wish and which the economy has done very well in terms of digital infrastructure itself, the use of smartphone, etc. So, it's an area of opportunity," he added.