QR Code payment system in Nepal | Framework, Challenges and Future

What exactly is QR code payment 

A QR (Quick Response) Code is a machine-readable code that consists of a formation of black and white squares, which are used for storing URLs or other information for your smartphone camera to read. It is a type of two-dimensional barcode which our smartphones can read. And QR Code payment is a contactless payment method where you pay your bills by scanning a QR Code from a mobile app.

Rise of QR code payment in Nepal 

With the improvement of the internet & a growing number of smartphone users in the country, the Digital payment system has picked up a pace. Also, the pandemic situation we’ve been through has driven the need for contactless payments, and QR code payment is best suited for this situation.  

Nowadays we can see the use of QR code payment from small groceries and tea shops to high-end restaurants and businesses in Nepal. Also, the Nepal Rastra Bank is encouraging the agenda of QR code payments for small-scale businesses which have shown a significant amount of growth in the use of digital payments. 

Currently, there are 9 licensed PSOs (payment Service Operators) and 18 PSPs (Payment Service Platforms) which have got approval from Nepal Rastra Bank to provide QR services. 

 

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NRB Framework for QR based payments

The Nepal Rastra Bank framework for the QR-based payments entitles Acquirere, Customers, Issuers, Merchant, Network Members, PSOs, PSPs, and Network as the defined parties to a QR code initiated transactions. 

According to the definition of NRB 

• Acquirers: They are the financial institutions or the payment service provider (e-money operators), responsible for enrolling merchants. They are the network members who create and owns merchants. 
• Customers:  are the individuals who use NepalQR based payment services. 
• Issuers: are the network members who create and owns customers and facilitate payments from current accounts, savings accounts, mobile-based e-money accounts, and cards. 
• Merchant: are entities registered with acquirers who accept NepalQR based payments. 
• Network Members: are Banks and Financial Institutions (BFIs), Payment System Operators (PSOs), Payment Service Providers (PSPs), other service providers, and their successors and assigns to join the network under the terms and conditions stipulated in the respective membership agreement to provide the service under the particular network to their customers and/or agents. 
• Payment System Operator (PSO): Are the entities licensed as PSO by NRB. 
• Payment Service Provider (PSP): Are the entities licensed as PSP by NRB.
• Scheme/Network: means a shared payment network developed and managed by Payment System Operator (PSO) which allows transactions and payments routing among and within its members.

Challenges

One of the major challenges for the QR code payment system in Nepal is education about the digital payment system to the public and merchants. In a country where cash-based payments dominated the market for such a long time, the idea of digital payment is obviously a new thing to catch on to. Also, the high Internet charges are adding to the ongoing challenges faced by the QR code payment system. Mainly the lack of ability of Nepali PSOs and PSPs to work among each other leading consumers to use different apps for different merchants is also a big challenge the QR code payment system of Nepal faces. For example: If a user of the e-Sewa QR code payment system goes to the merchant using the payment system of IME Pay then he/she is forced to make a cash payment. 

Future of QR code payments in Nepal

Replacing the dominating cash-based payment transaction now seems hard and an ultimate milestone. But, looking at the advancing technologies, the approach of consumers towards the digital-payment, the growing literacy rate of the country, increase in the user base of smartphones, everything directs towards the growth of the QR code payment system in Nepal. The correct mixture of NRB and Nepal Government plans and policies regarding Digital payments along with efficient interoperability among different PSOs and PSPs will surely help in the tremendous growth of the QR code-based payment system in Nepal.

Also read: MDMS to be implemented starting Jestha 2078

Do you use any QR code-based payment system? Let us know down in the comment section.

 

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