The last 3-5 years has seen major change in the digital payments space in Nepal. It has been able to establish payment systems for multiple instruments from wallets supporting micro-retail payments to large value RTGS systems. There are other payment systems for electronic cheque clearing, ACH, mobile banking, connectIPS as faster payment system, debit & credit cards as issuing instruments and POS, ATM, QR, etc. as acquiring instruments. Similarly, the adoption and acceptance of digital payments has been increasing in multi-folds. Part of the growth is due to NRB’s policy direction to use both BFIs and non-bank entities to drive and achieve its digital payments related objectives. While it has ensured that the supply side infrastructures have increased, there is now a harsh requirement to establish interoperability between the players, infrastructures and instruments.
It is with great pleasure that NCHL has been trusted for the implementation and operation of National Payment Switch (NPS) for establishing additional retail instruments and interoperability of card & non-card instruments and infrastructures, corresponding to which it has already established Retail Payment Switch and national card switch & domestic scheme is under implementation. We remain committed to our principle of re-investment into national payments infrastructures and to collaborate with the BFIs, PSPs, PSOs and other stakeholders while playing a central role in the digital transformation of Nepal.
The fiscal year 2078/79 (2021/22) has been an interesting yet challenging year for NCHL. We have seen major growth in the real-time retail payment system (RPS/ connectIPS) and NCHL-IPS, while majority of the transactions have been received through National Payments Interface (NPI). NPI is an open API based payment service that provides the members to access multiple payment systems, services and ensures interoperability. We have positive outlook on open APIs for payments, finance and business, which is expected to drive digital economy.
Due to the merger of the BFIs, the number of participating member BFIs is decreasing but we have been able to onboard indirect/ technical members within our network. Along with the strategic stakeholders that are using NCHL’s infrastructures including Government and Semi[1]Government, large institutions have also started to use our systems as indirect or technical members. GoN’s digital transaction has reach 73.5 percent of its expenses and 12.5 percent of its revenue collection in terms of value of transactions during the FY 2078/79, almost all have been processed through NCHL’s infrastructures. It has already reached 79.2 percent & 28.5 percent during FY 2079/80 (until end of Mangsir 2079). While retail B2C segment will continue to grow in terms of volume of digital transaction, B2B segment supported by large institutions is expected to provide much needed impetus for digital transaction value.
The average daily cheques transaction volume in NCHL[1]ECC has increased to 61,507 as against 54,394 in the previous year. The daily transaction settlement value has increased to NPR 38.7 Billion from NPR 35.4 Billion in the previous year. The daily average transaction volume and average daily settlement value in NCHL-IPS was 56,834 and NPR 8.7 Billion as against 44,615 and NPR 9.6 Billion in the previous year. And the daily average transaction volume and settlement value in RPS (connectIPS) was 144,533 and NPR 11.3 Billion as against 74,434 and NPR 5.4 Billion in the previous year. The digital transactions in RPS is expected to grow further, whereby, transactions in NCHL-IPS seems to have been moved towards RPS, due to excessive expectation towards real-time payments
Product and service development at NCHL has been the highest priority so that we are able to research, innovate and operationalize various instruments and services. We have increased our product development team and working together with the BFIs on new use cases. While we remain agile on product and service development, we have continued to further strengthen and invest in the risk management framework.
As part of our strategy to support Nepal Rastra Bank’s policy to support and improve digital payment ecosystem, we will continue to play necessary role within the payments industry and to work together with the licensed PSPs/ PSOs and other key entities in a collaborative model. We look forward to realizing our principle of re[1]investment in the planned implementation of National Payment Switch (NPS) in the coming ƧŨïÓį ƘûÓšŨȣ >ěƑûĺ űĖû ńƑěõȼDzǺ ŨěűŹÓűěńĺȤ űĖûšû are uncertainty on how the economy will move, but we see silver lining for increased acceptance of digital payments that gives a positive outlook for payments industry in the current and coming years. We will remain focus on improving the resilience and security of our core infrastructure.
Lastly, I would like to thank our NCHL team, and our Board for their guidance and the members for their continued support. I would also like to thank and acknowledge Nepal Rastra Bank for their trust on NCHL