Cross-Border Digital Payments Between India and Nepal Through UPI and NPI to Soon be a Reality

NPCI International Payments Limited (NIPL)and Nepal Clearing House Limited (NCHL) joined hands to facilitate cross-border digital payments between India and Nepal by integrating Unified Payments Interface (UPI) of India and National Payments Interface (NPI) of Nepal. The MoU was exchanged between NIPL, represented by Mr. Ritesh Shukla, CEO and NCHL, represented by Mr. Neelesh Man Singh Pradhan, CEO at Hyderabad House, New Delhi in the honorary presence of H. E. Narendra Modi, Prime Minister of India and H.E. Pushpa Kamal Dahal ‘Prachanda’, Prime Minister of Nepal during his state visit to India.

The MoU intends to establish a cross border connectivity for financial transactionsbetween the two countries to ease fund transfers and merchant payments by users includingstudents, pilgrims and travelers.The initial engagement will be for inward and outward transfers between the banks in India and Nepal. This will be achieved by integration between UPI of India and NPI of Nepal to enable existing instruments for cross border transactions, which will be subsequently extended for other merchant payments. This is one of the major milestones in the region that intends to inter-connect domestic real-time retail payment systems of two countries to enable cross border payments. UPI is one of the most scalable and advanced payment infrastructures in the world. The integration is also expected to support Nepal to enhance its payment systems.

Based on the MoU, NCHL and NIPL will duly establish technical integration, legal & compliance structure and business aspects of the cross-border transactions. For each of the use cases, a definitive agreement will be entered between the entities for the rollout. The transaction limit, transaction fees and other control aspects for each of the use cases will be implemented after due consultation and approvals, as may be required, with the respective central banks.

NPCI International Payments Limited (NIPL), a wholly owned subsidiary of the National Payments Corporation of India (NPCI), is focused on transforming payments across the globe with the use of technology and innovation. NPCI, an umbrella organization for operating retail payments and settlement systems in India, is an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) for creating robust digital payment &settlement infrastructure in India. Similarly, NCHL is established under the leadership of Nepal Rastra Bank (The Central Bank of Nepal) with participation of all the banks & financial institutions of Nepal. NCHL has implemented and has been operating multiple national payment, clearing and settlement systems in Nepal, with the recent rollout of Retail Payment Switch (RPS) under National Payment Switch (NPS).It is also implementing domestic card scheme (NEPALPAY) as part of the NPS.

This will make spending in Nepal much more convenient for Indian tourists and help boost tourism. One small step towards greater financial inclusion and digital connectivity between our two nations! 🇳🇵 🤝 🇮🇳 The move is seen as a positive first step towards exploiting the potential of open digital payments to facilitate cross-border commerce and economic integration between the two countries. But critics argue that a broader strategy involving multiple partners will be required for Nepal to fully benefit from the digital payments ecosystem.

Best wishes to NCHL for even greater successes ahead! Your achievement today reflects the immense potential within Nepal’s thriving fintech sector.