It has been more than a decade since digital payments were first introduced in Nepal, with Kumari Bank being the pioneer in 2002 to be exact. Yet, in 2018, after almost 16 years, we are still in the crawling stages with many gaps yet to be filled and many advances yet to be made.

In Nepal, there are more than five digital payment platforms established that have been operating digital payment services. Similarly, the majority of our banks have their e-banking services as well. We can also see the growing number of apps also rely on digital payments for the exchange of goods and services. Similarly, in India and China, our neighboring countries, they have a majority of their payments handled digitally through digital payment services with big players such as WeChat, PayPal, PayTM and AliPay. On the other side of the spectrum, our economy has a long way to go.

Yes, we have digital payment platforms like Esewa, iPay, and Khalti providing these services in our country, we are yet to witness the growth of the cashless transaction that we have been expecting for the past decade. Our service providers still being in the infant stages, there is still a long way to go for us to be fully acquainted with the payment system.

With the increasing internet penetration among people of Nepal, people are getting more used to the know-how of digital payment. According to the (NTA) Nepal Telecom Authority’s 2017 report, there prevails about 63 percent of internet penetration in Nepal and the mobile penetration itself is 125 percent. The latest reports also mention that the country’s smartphone penetration is over the 50 percent mark. It is evident that majority of the country’s population is familiar with the internet and smartphones.

While the system of digital payment is undoubtedly fast, efficient and time-saving, the road to the establishment of a thriving digital payment community certainly has some legitimate challenges and concerns.. Especially in a country like Nepal which is already burdened with several other problems, the following are the challenges that occur in the facilitation of mobile money:

1. User Experience: The overall experience of consumers using digital payment apps/website especially in terms of how easy and smooth it is to use highly determines the number of consumers using it. The digital payment apps aren’t as user-friendly as they use it causing people’s reluctance to the service. There occurs a lot of hassle just to complete a simple transaction. Not only that, there are a lot of steps required to load the amount in the digital wallet. The whole process of using a digital wallet is quite complicated. Let’s suppose you’re in a restaurant and you see a dish on the menu whose name is quite difficult to pronounce and sounds very unfamiliar. You won’t go ahead and order something like that, would you? It’s the same with digital payment apps that are complicated to use.

2. Government regulations: The government regulations regarding financial transactions have always been strict especially for payments outside the country using credit cards. Adding to the misery, the government has made certain rules regarding digital payment as well. The newly posed threshold by the Nepal Rastra Bank regarding digital payment has been considered highly discouraging by many. With new directives, the government has set the limit for the payments like credit/debit card, mobile banking, internet banking and wallet payments. NRB has proposed a payment threshold for mobile payment, under which users can make payment of up to Rs 5,000 in one transaction and daily and monthly payment limit would be fixed at Rs 10,000 and Rs 50,000, respectively. While NRB has asserted that it will promote mobile and internet payments, it has still limited transactions of payments. The already frail digital payment system is more prone to be jeopardized through these limitations eventually leading to the disruption of the economy.

3. Security: In the current scenario, security ranks second among concerns for customers regarding mobile payment. While mobile payments provide customers the ability to make payment transactions at their own convenience from their secure mobile device, many of them fear someone else intercepting their payment information or other data. People fear their various data getting breached through digital payment websites. The recent news of Facebook sharing its data with Cambridge Analytica has crystallized the anxiety of consumers regarding digital payment. In the event that an individual has stored their card details and other personal account information on their mobile device, they are subject to losing it and being a possible victim of credit card fraud and identity theft. Similarly, there are apps that are purposefully designed to look trusted and secured when in reality they make it easier for criminals capture sensitive personal information or to commit credit card fraud. However, tech intellectuals are working on solutions to prevent such frauds.

4. Slow user adoption: Another one of the main challenges of the mobile payment system in Nepal is the slow user adoption. A lot of people in Nepal are still accustomed to the traditional methods of payments and are only comfortable using cash and credit cards. Some may even consider the scheme of mobile payment to be pointless. Another reason for slow user adoption could also be the differences in demographics. People from different generations have their own preferences in making payments. While the majority of Nepal’s population lies between the age group of 25–54 years and while a lot of the youths are embracing the concept of digital payment, there are still people from the older generations that do not really approve of the concept of cashless transactions. For consumers to be familiar with the mobile payment experience, payment service providers need to educate them, earn their trust and make them feel assured regarding their security concerns.

As the day progresses by, we are becoming more and more dependent on our smartphones and laptops. A lot of enterprises in Nepal are based on digital payment and it is crucial that digital payment fosters properly for the benefit of the entrepreneurs as well. We’re moving towards digital advancement but we’re still lagging behind to the above mentioned challenges. Overcoming these challenges will surely bring forth the changes we want to see in our digital payment system.