NRB rolls out national payment ecosystem: One network for all digital transactions

KATHMANDU: Nepal Rastra Bank (NRB) has unveiled the National Payment Switch (NPS) and its accompanying National Payment Ecosystem Master Framework 2025, marking a decisive step toward creating a unified and fully interoperable digital payment infrastructure for Nepal. The initiative, spearheaded by the Nepal Clearing House Limited (NCHL) under NRB’s directive, aims to consolidate fragmented payment systems, streamline digital transactions, and align the country’s financial infrastructure with international standards.

The National Payment Switch will act as the central backbone for routing, clearing, and settling both card and non-card transactions within Nepal. It connects banks, financial institutions, and non-bank payment service providers (PSPs) into a single, interoperable network, ensuring faster, more affordable, and more secure payment experiences for users.

NRB officials emphasize that this switch is a strategic reform under the Payment and Settlement Act, 2019, which mandates the integration of all licensed institutions into the national switch. The initiative not only enhances operational efficiency but also reduces transaction costs for banks, digital wallets, and consumers alike.

A Unified National Ecosystem

Currently, Nepal’s payment landscape is fragmented—featuring multiple schemes such as NEPALPAY, Fonepay, SmartPay, and Instapay, each operating in closed networks. The NPS will bridge these systems, enabling network-to-network interoperability, meaning a consumer using one wallet or card will be able to transact seamlessly across platforms and merchants without restrictions.

The ecosystem integrates several key components:

Retail Payment Switch (RPS): Facilitates real-time, non-card transactions such as fund transfers, QR payments, and bill settlements.

National Card Switch (NCS): Manages local routing and settlement of card transactions, including the NEPALPAY Card, Nepal’s domestic card scheme compliant with EMV standards.

NPIx Cross-Border Engine: Enables real-time international transactions—covering person-to-person (P2P) and person-to-merchant (P2M) payments—integrating Nepal’s digital framework with global payment partners like Discover Financial Services.

The NPS’s architecture also ensures settlements through NRB’s Real Time Gross Settlement (RTGS) system, guaranteeing security and finality in central bank money, even for non-bank participants.

Financial Inclusion and Local Empowerment

By consolidating digital infrastructure, the NRB envisions a more inclusive economy where rural users, small businesses, and micro-merchants gain equal access to digital payments. The NPS supports NEPALPAY QR, a unified QR framework that eliminates the need for multiple standees at retail points. It will also integrate government payment gateways, allowing citizens to pay taxes, utilities, and public service fees directly through interoperable channels.

The document underscores that the NPS is not a monopoly, but a shared national infrastructure enabling private competition and innovation under standardized, transparent rules. This promotes balanced growth across fintech firms, banks, and PSPs while enhancing consumer protection.

Cross-Border Connectivity and Economic Vision

A major milestone of the NPS is the integration of cross-border payment capabilities through NPIx, allowing Nepali users to send and receive international remittances instantly and at reduced cost. This is expected to boost inward remittance flows, which contribute over 25 percent of Nepal’s GDP, while also supporting outward payments related to tourism, education, and trade.

NRB plans to expand partnerships with regional clearinghouses and global networks, connecting Nepal’s financial system with South Asia’s digital economy and beyond. This strategic alignment could make Nepal a cross-border fintech hub in the Himalayan region.

Forward-Looking Analysis and Recommendations

The rollout of NPS is a landmark digital transformation, yet experts caution that governance, cybersecurity, and system redundancy will be critical for long-term resilience. Regulators should establish:

A dedicated Cyber Risk and Data Integrity Framework within NRB’s Payment Systems Department.

A Public-Private Digital Finance Council to oversee interoperability testing, dispute resolution, and fair-pricing standards.

AI-driven Fraud Detection and Monitoring Systems embedded within NPS’s architecture for real-time threat detection.

Incentives for small PSPs and rural merchants to integrate early into the ecosystem through subsidized infrastructure or transaction rebates.

If executed strategically, the NPS could reduce digital transaction costs by 30–40%, promote cashless trade, and strengthen foreign direct investment (FDI) confidence in Nepal’s fintech and payment sector.

A Step Toward a Digital, Cashless Nepal

The National Payment Ecosystem 2025 redefines how money moves within Nepal — connecting citizens, businesses, and government agencies into one digital financial grid. It positions the country for a future where cross-border e-commerce, instant remittances, and digital micro-payments become standard practice.

As NRB Governor Biswonath Paudel noted in policy briefings, “The National Payment Switch is not just a technology project — it is Nepal’s financial backbone for a digital economy.”