KATHMANDU, Jan 13: Nepal has experienced a significant shift toward digital payment systems, driven by factors such as the COVID-19 pandemic, government initiatives, and increased mobile and internet penetration.
According to the Payment System Oversight Report 2023/24 released by Nepal Rastra Bank, Nepal’s payment systems have shown substantial growth in recent years, with faster payment systems, QR code-based payments, and mobile/internet banking leading the way. While the use of cards and cheques has slowed or declined, the overall trend indicates a strong shift towards digital payments.
The report aims to provide insights into the development of Nepal's payment systems and explain the oversight activities conducted by the Payment Systems Department (PSD) to ensure an efficient, safe, and sound payment system in the country.
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The report states that the use of connectIPS, a major faster payment system allowing bank customers to make instant payments through a mobile application or web portal, has surged, especially after the COVID-19 pandemic. In FY 2023/24, the total number of connectIPS transactions increased by 49.5%, reaching 75.56 million.
Similarly, QR code-based payments have witnessed a remarkable rise in adoption, becoming one of the most preferred payment methods in Nepal. The number and value of QR code-based transactions grew by 117.03% and 103.66%, respectively, in FY 2023/24 compared to FY 2022/23.
The user base of mobile and internet banking has also expanded significantly. According to the NRB report, the number of mobile banking users in FY 2023/24 increased by 15.4%, reaching 24.65 million, while internet banking users rose by 3.4%, reaching 1.92 million.
While the use of debit and credit cards has been steadily increasing, the growth rate has slowed compared to other payment methods. This is likely due to the growing popularity of alternative payment options like QR codes and faster payment systems, according to the NRB report.
The use of prepaid cards decreased significantly during the COVID-19 pandemic due to travel restrictions. However, a slight increase in their growth rate has been observed in recent years, attributed to the revival of tourism.
The NRB report also shows a decline in the use of cheques and the ECC system as digital financial services become more prevalent. In FY 2023/24, cheque usage dropped by 4.5%.
One of the main reasons behind the surge in digital payment systems has been attributed to increased mobile and internet penetration. According to the report, the 4G/LTE services now cover 741 of 753 local levels across 77 districts in Nepal. While the smartphone penetration rate stands at 72.94%, 15% people have access to computers/laptops and 38% households have access to the internet services.
