By Rick M 
The Nepalese market of digital payments is rapidly expanding: the transaction traffic has increased by more than 200% within the past year. This emerging Fintech revolution is gradually changing the way people of Nepal, especially the common populace, perform their financial transactions whether in the cities or the villages.
According to the Nepal Rastra Bank (NRB) mobile banking has more than 15 million users that are nearly 50 % of the population. QR code payments are now prevalent with even the small shops on the streets and local vendors adopting the technology.
These include the following reasons; The outbreak of COVID-19 forced people to avoid physical cash as most of the business and consumers adopted contactless payments. Specifically, actions taken by governments have also contributed to Digital Financial Inclusion.
This is especially the case with homegrown fintech startups that have been emerging in various parts of the globe. Today, service providers such as eSewa, Khalti, IME Pay, etc. have become familiar to the people and they are engaged in providing services including bill payments and remittance transfers. These platforms are now venturing into other segments that include micro lending and insurance hence posing a threat to traditional financial services.
Other international players are also coming to the market where Google Pay has also recently started its operations with the help of local banks. This has increase competition in the sector and thereby increase service delivery and reducing transaction fees for the consumers.
The change towards the digital mode of payment is thus producing profound impacts to the Nepalese economy. Consumers and small business also find that they have higher sales and less difficulty in accounting due to the use of e-commerce. The process of economy going formal is on the rise as more of the transactions are shifting to the measurable and recorded online space.
Another advantage is the financial inclusion which digital wallet offers banking services to people who have never had access to formal financial services. The mobile financial services have been embraced because of the privacy and convenience they afford especially to women.
However, the development of digital payments has also brought issues in the recent past. Security researchers have reported a rise in attempts at obtaining money under false pretenses especially from people not so familiar with computer technologies. In return, the NRB has enhanced security measures and embarked on public sensitization on the risks of digital banking.
The physical barriers are still an issue of concern; especially in the rural areas where internet connection is still a major issue. The government has also outlined its plans to increase the 4G penetration to 90% of the population by the year 2025 in order to support the growth of the digital financial services.
The effectiveness of the digital payments is also forcing the physical banks to change their operations. To keep up with the ever-evolving market, many are sourcing fintech firms or creating their own digital applications. The NRB is also in the process of developing regulatory measures to ensure that the innovative financial system is stable.
In the future, more incorporation of artificial intelligence and blockchain technology will be seen in the Nepalese fintech sector as per the experts of the industry. Some of the emerging technologies that are being worked on by various startups include cryptocurrency and decentralized finance but the major constraint that is being observed is the lack of clear laws to govern these industries.
Digital payment is also creating new opportunity in e-commerce and cross border transaction. The Nepali firms are now able to access the global markets more effectively and easily and at the same time the foreign companies are also developing more interest in the expanding Nepali digital economy.
While Nepal is still undergoing its digital financial transformation, policy makers are left with a challenge of how to create an environment that supports innovation while at the same time protecting consumers and maintaining financial stability. The future years will define whether the Nepalese fintech revolution will be able to catalyse the overall economic growth and financial inclusion.