In the First Quarter, Digital Payments Doubled to Rs1.22 Trn.
In the first quarter of this year, Nepal’s digital payment systems saw a 94 percent increase in sales year over year. As people began paying online for everyday necessities at local retailers as well as premium products.
In contrast to traditional cash payments, digital payment refers to contactless transactions done via online methods.
Digital payments nearly doubled in the first quarter of the current fiscal year, which began in mid-July 2021, according to Nepal Rastra Bank, the country’s central bank, owing to a rise in the number of people adjusting to online payment.
In the first three months of the fiscal year (mid-July to mid-October), turnover reached Rs1.22 trillion. Up from Rs630.85 billion in the previous fiscal year.
According to the central bank, the biggest monthly turnover of Rs470.51 billion was recorded by digital payment systems between mid-September and mid-October, coinciding with the festival shopping season.
Online payments totaled Rs256.39 billion over the same period last fiscal year.
Digital payments totaled Rs361.20 billion in the first month of the fiscal year (mid-July to mid-August). Which is increasing to Rs392 billion in the second month (mid-August to mid-September).
The number of transactions increased dramatically, hitting 54.12 million in the first three months of this fiscal year. It is up from 34.23 million in the same time the previous fiscal year.
According to industry experts, on November 18, the countrywide payment switch came online, entering a new era of digital transactions.
The figure is significantly lower than the Rs234.49 billion recorded in the same time as the previous fiscal year. The IPS is a system that transfers money from one account to another at member banks and financial institutions.
Wallet transactions increased to 13.56 million from mid-September to mid-October, totaling Rs15.18 billion. Up from Rs9.88 billion in the previous fiscal year.
According to the central bank, quick response (QR) code-based payments increased substantially to Rs6 billion from Rs969 million in mid-September to mid-October.
In the review period, electronic funds transfer at point of sale (retail transactions) increased to Rs4.84 billion from Rs2.34 billion previously.
From mid-September to mid-October, e-commerce transactions using cards fell to Rs455 million. Down from Rs794 million in the previous fiscal year’s similar period.
Despite the surge in digital transactions, stakeholders say. Nepal still has a long way to go before becoming a cashless society. Because of its transparency and lower operating expenses, electronic payments transfer is considered the way of the future.
Mahesh Sharma Dhakal, senior deputy executive officer of Global IME Bank, told the Post during a recent discussion on the e-commerce ecosystem that the government should subsidize transaction fees or charge a minimum amount to encourage consumers to use digital payment.
Dev Kumar Dhakal, a spokesperson for Nepal Rastra Bank, has problems with interoperability systems while making online transactions using QR codes or wallet transactions. Because there is no single service provider for all banks and financial institutions.
Since its establishment, the central bank has worked to promote digital wallets to boost the volume of digital transactions.
Poor internet connectivity and increasing data rates, according to industry experts, dissuade individuals from using digital services such as online payment and online shopping.
According to the Status Report on Connectivity in the least Developed Countries, a Nepali must spend 2.6 percent of their gross annual income to buy internet connection. Putting Nepal behind India, Sri Lanka, and Pakistan in terms of cheap digital access cost is less than 1%.
According to the International Telecommunication Union, broadband service in developing countries should not cost more than 2% of gross national income per capita.
Slow internet connections have also been a source of the complaint.
According to a management and information system report published by Nepal Telecommunications Authority, internet penetration was 113.57 percent of the total population in mid-October, with mobile broadband accounting for 84.63 percent and fixed broadband (wired) accounting for 28.28 percent of subscriptions.