Nepal Rastra Bank Eases Cross-Border QR Code Transactions with India

development bond, NRB

KATHMANDU: In a significant move to facilitate cross-border financial transactions, Nepal Rastra Bank (NRB) has amended its unified circular to allow individuals to use Quick Response (QR) codes for transactions with India. This decision marks a major step forward in enhancing digital payment capabilities between the two neighboring countries.

The central bank’s amendment permits the use of QR codes and related payment tools through the Retail Payment Switch until the national payment switch becomes fully operational. Previously, such transactions were limited to the national payment switch.

“The payments for goods and services can now be received in foreign currencies using electronic payments, including QR codes,” stated NRB in an official release. The central bank has directed payment service providers (PSPs) to use the Retail Payment Switch for the time being.

Under the new directive, PSPs are authorized to conduct acquiring and issuing transactions under Merchant Payments (P2M). However, PSPs must secure approval from the NRB’s Payment Systems Department before signing a memorandum of understanding with foreign companies.

Required documentation includes the main agreement paper, company profile, transaction interface, configuration details, cyber security provisions, and measures to prevent money laundering and terrorist financing.

In case of defective transactions, force settlement must be completed within 30 days (T+30 basis). Both the issuing and acquiring companies are subject to supervision of the settlement process.

Additionally, companies without licenses to transact in foreign currencies can now receive payments from abroad using PSPs’ accounts and wallets, with payments converted to Nepali currency via designated Nepali banks.

The NRB also announced that clients of Nepali commercial banks and national-level development banks can use QR codes for exchanging Indian currency. This facility is limited to payments made in India and Bhutan.

This cross-border payment system is expected to significantly benefit Nepali entrepreneurs and Indian visitors, promoting smoother and more efficient financial interactions. The groundwork for this initiative was laid during Prime Minister Pushpa Kamal Dahal’s visit to India in June 2023, when a bilateral agreement for the digital payment system was signed.

The introduction of these measures demonstrates NRB’s commitment to modernizing the country’s financial infrastructure and enhancing cross-border economic cooperation.

Fiscal Nepal |
Friday June 28, 2024, 10:05:16 AM |

Leave a Reply

Your email address will not be published. Required fields are marked *