Alipay, the dominant China-based payment service provider, has been granted permission to operate the electronic payment service in Nepal. Nepal Rastra Bank (NRB) has granted permission to Alipay to conduct its operations in the country.
With this decision, the central bank has authorized two Chinese payment service providers to extend their electronic payment service in Nepal. Earlier, NRB had granted permission to WeChat Pay to conduct business transactions in Nepal.
The NRB has authorized Himalayan Bank to provide the settlement services of transactions made through Alipay in Nepal, as per Revati Prasad Nepal, executive director and head of the Payment Systems Department of NRB. WeChat Pay and Alipay are particularly popular among Chinese tourists and were being used previously too to pay for transactions in the hospitality sector in Nepal.
However, the payment apps were previously being used illegally in Nepal by Chinese tourists visiting Thamel-based hotels, restaurants and travel agencies run by Chinese nationals. This had prevented Nepal from logging and recording the expenses made by Chinese tourists as foreign income.
The illegal use of digital wallets had also enabled Chinese business operators, who received payment via these apps, to send earnings to their home country by bypassing local tax networks because they left no evidence to prove that those transactions took place in Nepal. With the official declaration from the government to legalize it, this is expected to be well regulated now.