India-Nepal Digital Payment Gateway Set to Launch in Feb 2024

The commencement of the digital payment gateway between India and Nepal is anticipated in its initial phase by late February 2024, as stated on Friday by Indian Ambassador Naveen Srivastava. His announcement referred to the agreement between NPCI and NCHL, which was signed during Prime Minister Pushpa Kamal Dahal's visit to India earlier this year.

Ambassador Srivastava emphasized the significance of fintech as a groundbreaking development worldwide, specifically in India. He highlighted India's leadership in digital payments through the Unified Payment Interface (UPI). This fintech advancement presents an opportunity for increased collaboration between India and Nepal.

Srivastava continued, discussing the launch of the Ru-pay card in Nepal last year, initiated by Ambassador Manjeev Singh Puri. He mentioned further progress in digital cross-border payments through the support of Governor Maha Prasad Adhikari and the Finance Minister earlier this year during PM Prachanda's visit to India. That visit led to an MoU signing between NPCI (National Payments Corporation of India) and Nepal Clearing House Limited.

Expressing optimism, the Indian envoy revealed that by late February 2024, the NPCI and NCHL payment system would begin operations, enabling instantaneous people-to-people cross-border transactions. Ambassador Srivastava made these remarks during the opening session of the Nepal BFSI (Banking, Financial Service, and Insurance Summit) organized by the India-Nepal Center of the PHD Chamber of Commerce and Industry (PHDCCI).

In June, NPCI International Payments Limited (NIPL) and Nepal Clearing House Limited (NCHL) partnered to enable cross-border digital payments between India and Nepal by integrating India's Unified Payments Interface (UPI) with Nepal's National Payments Interface (NPI).

During PM Pushpa Kamal Dahal's visit to New Delhi, an MoU was exchanged between NIPL and NCHL. According to the MoU, both organizations aim to create cross-border connectivity for financial transactions between the two countries, streamlining fund transfers and merchant payments by users.

The initial collaboration will focus on integrating the UPI of India and the NPI of Nepal for cross-border transactions involving inward and outward transfers between banks in both countries. The project will later extend to other merchant payments.

With 10% investment from Nepal Rastra Bank—Nepal's Central Bank—and 90% from various commercial banks, Nepal Clearing House Limited (NCHL) is designated by the Nepalese government.

Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari highlighted India and Nepal's joint efforts to enhance payment systems between the two nations. He expressed excitement about further improving digital cross-border payment methods.

The first phase of the India-Nepal payment gateway will provide much-needed relief for Indian tourists visiting Nepal since Nepal has prohibited Indian currency values above 100 (INR). This new system will also facilitate payments for more significant digital goods and stimulate real-time interoperable person-to-person (P2P) and merchant payment transactions (P2M).