What Is the Cross-Border Payment Agreement Between Nepal and India? When Will Nepalis Be Able to Make QR Code Payments in India?
Photo Source, Jaishankar/X
Following an agreement signed over the weekend in Delhi, cross-border peer-to-peer payment between Nepal and India has been activated.
This step is part of the understanding reached in June 2023 between Nepal Clearing House Limited (NCHL) and the National Payments Corporation of India (NPCI).
As per this agreement, Indians have been able to make payments in Nepal via QR codes starting from March 2024, but Nepalis have not yet been able to access a similar service in India.
What Is the Latest Agreement?
Peer-to-peer (P2P) payment refers to the direct transfer of funds from one individual’s bank account to another’s without intermediaries.
This system, previously agreed upon with India, now facilitates easy and instant money transfer and receipt between citizens of the two countries.
“Previously, cross-border payments were made using SWIFT or RTGS via banks. Now, they can be sent and received conveniently through mobile banking,” said NCHL Chief Executive Officer Nilesh Man Singh Pradhan while announcing the implementation in Delhi on Saturday.
“This method allows immediate credit and debit to accounts.”
The necessary technology and infrastructure for this system have been collaboratively managed by NCHL on Nepal’s side and NPCI on India’s side. Currently, eight Nepali banks participate in this system, and payments can be made via their respective mobile banking applications.
What Are the Payment Limits and Conditions?
While the payment agreement is implemented through NCHL and NPCI, the transaction limits are defined by the central banks of the two countries.
Nepal Rastra Bank has set a limit for Nepalis sending money to India at NPR 15,000 per transaction and up to NPR 100,000 per month.
The Reserve Bank of India has allowed a single transaction limit of INR 200,000 with no specified monthly cap.
“In the initial phase, this facility has been extended to Indian nationals residing or working in Nepal who have bank accounts here, enabling them to send money across the border,” stated Nepal Rastra Bank spokesperson Gurupasad Paudel.
“In the next phase, we are preparing to offer this facility to Nepali citizens as well.”
When Will Nepalis Be Able to Make QR Payments in India?
Although an initial agreement between NCHL and NPCI was made nearly three years ago, Nepali users have not yet been able to make payments in India using QR codes.
With the current implementation of peer-to-peer payments, introducing peer-to-merchant (P2M) QR payment systems is the next step, as explained by NCHL’s CEO.
Photo Source, Reuters
“The 2023 agreement included plans to implement P2P and P2M payments. While P2P has been rolled out, we will now progressively work on P2M implementation,” Pradhan stated.
The Nepal Rastra Bank spokesperson also explained the phased approach.
“The 2023 agreement specified three phases: firstly, peer-to-peer payments aiding remittances; secondly, peer-to-merchant QR payments; and thirdly, settlement of transactions via a national payment switch,” he said.
Since systems have been integrated between Nepal’s PhonePe and India’s UPI under P2M, Indians have started making QR payments in Nepal.
Stakeholders are cautiously evaluating when Nepalis will be able to make QR payments in India, with plans to implement it at an appropriate time, according to spokesperson Paudel.
“Technically, we are preparing, but not aggressively. We are proceeding with caution considering the economic contexts of both countries,” he added.
He also urged the public not to forget that most Nepali-issued debit and credit cards already allow payments in India.
“Card payments have been authorized in three sectors: hospitals, hotels, and pharmaceuticals,” he explained.
Finally, due to the increasing adoption of QR code payments in India, this system is expected to bring more convenience for cross-border transactions.
“Soon, Nepal Rastra Bank will enable Nepalis to make payments via the P2M system,” he said.
Artificial Intelligence Cooperation Agreement
During the Delhi agreement meeting, an understanding on artificial intelligence (AI) collaboration was also reached.
The Digital Public Infrastructure and Artificial Intelligence Center at Kathmandu University’s School of Engineering will collaborate with India’s Digital India Linguistic Division.
The partnership aims to develop a framework promoting language AI, multilingual digital public infrastructure, and inclusive digital systems between India and Nepal.
“Indian institutions are developing models for multiple Indian languages. Training is underway for languages such as Nepali and Maithili. If we gain access, we can retrain these models with our datasets in relevant contexts,” explained Associate Dean and professor Bal Krishna Bal, signing on behalf of Kathmandu University.
Under this agreement, both organizations will collaborate to develop high-quality language datasets for Nepali, speech-to-text (converting speech into writing), text-to-speech (converting text into speech), machine translation, and related technologies.
“Kathmandu University is currently working on models for Nepali, Tamang, and English. This cooperation will significantly enhance our capabilities,” Professor Bal stated.
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