When Nepal and India launched the cross-border QR payment system in Falgun 2080, it was touted as a milestone. It was widely discussed as a sign of establishing a seamless digital financial relationship between the two neighboring countries. Since then, Indian tourists, students and patients visiting Nepal have been able to pay by 'scanning' the QR code from their mobile phones. However, Nepalese people visiting India have not yet received this facility.

Despite repeated assurances from Nepal's banks, payment service operators and the central bank that they are technically ready, the reciprocal service has not been launched. Despite various deadlines being set for the operation of the service, it has not been launched. The last time it was said that Nepalis would be able to make payments in India through QR from December 2024. However, neither side has given an explanation for the fact that payments have not started even after all this time. 

Although the bilateral agreement is expected to make cross-border digital payments much easier, for Nepalis it is limited to paper assurances so far. According to officials from Nepal's payment service provider PhonePe, discussions were held between Nepal Rastra Bank and the Reserve Bank of India in recent meetings to facilitate the payment process and address other policy uncertainties. India's National Payments Corporation of India (NPCI) and Nepal's PhonePe (which also has an investment from Kantipur Publications Limited's director Sambhav Sirohia) have both agreed to launch the service as a trial soon. And, experts say, some banks have even completed the certification process. 

'Our main goal is to expand maximum access to all banks in India,' said PhonePe CEO Divas Sapkota, 'However, we will face a challenge until all major banks complete the certification process for Nepali apps to fully access India.'

The service launch has been delayed because the Indian side wants a formal announcement from the highest political level, a senior official said on condition of anonymity. The official said that NPCI wanted to showcase this as an important diplomatic achievement between the two countries during the Prime Minister's visit. However, there has not been a political visit of that level between the two countries for a long time and it is not certain when such a visit will take place in the coming days. Whereas, in 2080, during the visit of the then Prime Minister Pushpa Kamal Dahal to India, a memorandum of understanding on electronic payment services was signed between the two countries. The memorandum was signed by Ritesh Shukla, Chief Executive Officer of NPCI of India, and Nileshman Singh Pradhan, Chief Executive Officer of NCHL on behalf of Nepal. 

According to experts in the financial-technology sector, the main reason for the delay in QR services by Nepali citizens in India is the structural difference between the payment systems of the two countries. In Nepal, when Indian travelers pay through QR codes, businesses charge a fee of 1.3 to 2 percent. In India, UPI transactions have been completely free for both users and businesses since January 2020. 

It is not clear who will bear the procedural costs when Nepalis make QR payments in India. Similarly, it has not been decided who will bear the fees to be paid to Nepali or Indian banks. It is not clear who will bear the procedural costs when Nepalese make QR payments in India. Similarly, it has not been decided who will bear the fees payable to Nepali or Indian banks. PhonePe officials informed that NPCI is making necessary changes to its platform to address these issues before opening this cross-border transaction. NPCI has also initiated the technical certification process of Nepali banks and payment service providers, and that it is taking time, Sapkota said. 

However, NPCI's response to the Kathmandu Post on this issue did not mention concrete details. 'Progress is being made as per the deadline,' said NPCI, which has been given the responsibility of operating retail payment infrastructure in India, 'We are preparing for operation by creating a structure in accordance with regulatory provisions.'

The Nepalese side, however, claims that its preparations have been completed. 'We are technically ready, we have even conducted trial transactions in India,' said Neeraj Sharma, Chief Marketing Officer of Nabil Bank. According to him, Nepal Clearing House Limited (NCHL), which operates the national payment switch, has completed all the technical procedures and completed the trial with eight/nine banks selected from both sides. “Since the cross-border digital payment agreement is at the government level, we are waiting for the central bank’s announcement to open full transactions for the general public,” said NCHL CEO Pradhan. Nepal Rastra Bank has also stated that it is ready to set the transaction limit as soon as the Indian signal comes.

This obstacle seen in QR is part of the delay in bilateral digital financial commitments. The MoU signed between NCHL and NPCI International in New Delhi in June 2023 covered not only QR payments but also cross-border digital remittances. Although it was expected that Nepalis working in India and Indian workers working in Nepal would get the facility of sending money at low cost and easily, it has not been implemented.

Currently, Nepalis living in India can send money through SBI Bank. However, they are forced to pay high fees for that. Nepal SBI Bank charges a fee of Rs 1 per thousand for sending Rs 1,000. The actual cost is higher when the exchange rate difference is included. According to a Rastra Bank official, the total cost of sending in this way reaches 4 percent. The proposed digital remittance system does not specify a limit on the fee charged for such transactions. However, Rastra Bank spokesperson Guru Prasad Poudel argued that the fee cannot be announced before the service is operational.

There is no official record of Nepalis working in India due to open borders and no passport required for reciprocal travel. According to Poudel, about 15 percent of the total remittances coming to Nepal come from India. “Person-to-person money transfers have become extremely important for both Indian workers in Nepal and Nepali workers in India,” said Sanjeev Subba, a financial technology and digital public infrastructure analyst. “This should be implemented as soon as possible.”

Indian tourism is enthusiastic about the ease of using QR in payments in Nepal. Some famous content creators in India have praised the simple and easy payment system in Nepal in their blogs. However, Indian tourists are enthusiastic about the ease of using QR for payments in Nepal. Some famous content creators in India have praised the simple and easy payment system in Nepal in their blogs. Indians visiting Nepal are making an average of 8,500 QR transactions per day. And, this generates a daily turnover of about 30 million rupees. When this service was launched in Nepal two years ago, there were only 2,000 transactions per day. Last year, during the English New Year, a record of 20,000 transactions was set in a single day. Indian travelers mostly make payments at supermarkets, hotels, and travel businesses like Bhatbhateni. 

Overall, payments made through QR in Nepal have almost doubled year on year, this year too, the total transaction amount from mid-Falgun to mid-Chaitum has reached 125.91 billion rupees, which was 80.19 billion rupees in the same period last year. Similarly, the number of transactions has increased from 27 million to 49 million. According to the Payment System Index Report of the National Bank, Nepal has earned Rs 550 million from cross-border QR acquiring through 24,606 transactions in the same month.

Not only India, Nepal has expanded QR access to visitors from more than 11 countries, including China, South Korea, Malaysia, Singapore and some European countries, through partnerships with Alipay, KakaoPay, Gcash and other wallets.