The news of UPI in Nepal started in 2022. It has been a long journey because it is for cross-border payment and needs a lot of work between Nepal and India at many levels. This technology is one of the most demanded fintech products of the time and it is expanding globally. In this article, we are discussing the basics of UPI and its status in Nepal. We shall discuss what is UPI, how it works, its benefits, UPI in Nepal, and its journey throughout its announcement in Nepal.
What is UPI?
Unified Payments Interface (UPI) is a mobile payment system that is instant and real-time. It is a type of Immediate Payment Service (IMPS) system. It was developed by the National Payments Corporation of India (NPCI) with an API over the IMPS system. This whole system was developed in collaboration with NPCI, the Indian Banks Association (IBA), and the Reserve Bank of India (RBI). UPI was launched in 2016 and has become the most revolutionary payment technology in India.
We have to admit that UPI is one of the best payment technology out there. This technology allows users to make payments to people, merchants, or service providers in an instant. The transfer is free and money can be sent across partner bank accounts without revealing bank details. Neither the sender nor the receiver need to reveal banking details. Everything happens via phone number QR code or Virtual Payment Address (VPA).
It is not like the digital wallets in Nepal where we load money from the account and then pay for top-ups or plane tickets. It is more like a wallet-linked account where we pay directly from a bank account. In the case of Nepal, wallet or payment service providers (PSP) charge money for transactions but UPI is free. Even Nepal’s most popular Connect IPS charges money for payment or transfer and this is where UPI wins in India because there is no charge.
How does UPI Work?
Let’s start from India because this is where it all starts. A person first needs to have a bank account in an Indian bank with his/her personal phone number linked with it. The bank account needs to have KYC with an Aadhar Card and PAN card. However, there are a few exceptions because foreigners or Nepalese students who have Indian bank accounts made using a bona fide certificate of college and a Nepalese passport can also use UPI.
The users need to install UPI-based apps such as Google Pay (GPay), Phonepe, Paytm, Amazon Pay, BHIM, BHIM SBI Pay, and others. Upon installing the app, it asks for your phone number and then verifies your number with the bank you select. The app finds out your account in the selected bank using just a phone number and links. After selecting the bank account, it asks to create a UPI PIN. This is the most important part because every payment requires a UPI PIN. Remember receiving doesn’t need any PIN.
Making Payments and Transfers
The app also allows you to set up a Virtual Payment Address (VPA) which is like a (phone number/name/custom name@unique bank identifier). For example 123456789@oksbi, mynameishari@ybl, nepal@upi. It also generates a scannable QR code or spot code that you can share with friends or family to receive payment. Users can also link multiple bank accounts and receive in anyone as per choice.
Now if you need to receive payment, you can just give your phone number, QR code, spot code, or VPA to the sender. In case you need to make a payment, you can use the receiver’s phone number, QR code, spot code, or VPA. To make merchant payments at a restaurant, or grocery shop, you can scan the QR code at their premise and make payment by giving a UPI PIN. Now in the case of merchant payment on sites such as Amazon, Netflix, and Spotify, you can either scan the QR code or provide a VPA. Then it will generate a request on the app such as GPay or Phonepe and you can approve the payment by giving PIN.
The interbank transfer is also possible in UPI-based apps. For example, if the receiver doesn’t have UPI, users can just enter details of the bank account, account holder name, branch code, and ISFC code.
UPI Growth in India and Its Reach on a Global Scale
The growth of UPI took a boost after the demonization in 2016. Its acceptance and use have seen astronomical growth. According to a press release by the Press Information Bureau (PIB) that was published on 18 December 2023, the value of UPI transactions was INRs 1 lakh crore in FY 2017-18 and it reached INRs 139 lakh crore in FY 2022-23. This always growing and will grow as global partners like Nepal join.
Due to UPI’s real-time settlement, simplicity, interoperability, and security, it is now available in many foreign countries. UPI in Nepal is just one part of this global expansion because UPI is now accepted in France, Malaysia, Mauritius, Singapore, Sri Lanka, UAE, and, the UK. By the way, there is one more thing to know, UPI was developed by NPCI which also developed the RuPay network for cards. RuPay cards were launched in 2022. Nepal SBI ATM and PoS accept RuPay cards.
Why do we need UPI in Nepal?
The answer is simple, it is the broader and deeper relations. This means multiple aspects which extend from relations, religion, tourism, trade, economy, education, and jobs. Nepalese and Indian people travel to each other country regularly for various types of work. Trade happens, and money flows here and there. However, the money flow is quite hard as carrying large values of physical currency or notes is not allowed. Cards also have limits and online payment is a huge hassle as only some Visa or Master cards are accepted on Indian sites. Indian tourists who come to Nepal also face the same issues.
Thus, the main objective of this Nepal-India UPI collaboration is to facilitate cross-border remittances between Nepal and India. Currently, the remittance process is time-consuming, costly, and cumbersome. India-to-Nepal remittance is quite easy using services like ‘SBI Indo-Nepal Remittance’ which helps to transfer money from India to Nepal within a day without hassle. However, sending from Nepal needs a lot of paperwork and physically going to NSBL.
With UPI, the remittance process will become faster, cheaper, and easier. Both Nepalese and Indian users will be able to send and receive money directly from their bank accounts using their mobile phones. This is the most important thing because it helps to grow business. For example, if Indian tourists could pay at Nepali hotels or flower shops at Pashupatinath easily, it could be a huge success because the issues of currency conversion, carrying notes, and card issues are all gone. Similarly, a Nepali could pay at a hotel in India or a hospital in India just with a QR code then it would be super easy.
We have to understand that the main target is C2B payment because that is most important for trade. Then there is C2C which is for remittance so that Nepalese workers in India can send money to Nepal and Indian workers can send money from Nepal to India. On the other hand, Nepalese people would also love to pay on sites such as Netflix India and Spotify from Nepal to purchase services. Nepalese would also appreciate being able to pay at Amazon, Flipkart, Zomato, Swiggy, Rapido, and Uber when they are in India using UPI from their own Nepali account.
The summary of the benefits of UPI in Nepal is as follows.
- With various UPI-supporting apps, Nepalese users can pay for goods and services in India, including online shopping, travel, education, health, and other areas, without having to worry about transaction or currency conversion fees.
- Nepali users in India can send and receive money with ease to and from friends and family in Nepal using their UPI IDs or mobile numbers.
- Using UPI, Nepalese companies may pay Indian suppliers and receive payments from Indian clients, lowering the expense and risk of doing business internationally.
- Nepalese businesses can also use the UPI platform to provide unique and value-added services to their clients, like as loyalty programs, cashbacks, discounts, and so on, thereby increasing their customer base and revenue.
Journey of UPI in Nepal: Announcement and Development
Let us simply explain this journey and what has happened till now with a simple timeline.
- 2022 February– Announcement of a partnership between NPCI International (NIPL), Gateway Payment Service (GPS), and Manam Infotech to deploy UPI in Nepal.
- 2023 September– At the Global Fintech Fest 2023, Fonepay and NPCI International (NIPL) announced a cooperation to develop a cross-border QR code-based payment solution between Nepal and India.
- 2024 February– Terms of Reference signed by the Reserve Bank of India (RBI) and Nepal Rastra Bank (NRB) on the integration of Unified Payments Interface (UPI) with Nepal’s National Payments Interface (NPI) for cross-border remittances.
Among all the talks, announcements, and agreements the press release by RBI on February 15, 2024, is the most trustworthy because that is directly from an official source and that is what’s required for all this. RBI and NRB working together actually put a solid foundation for UPI.
UPI Launch in Nepal
Many news sites, blogs, and YouTube channels have been milking views with rumors and just guesses. The truth is that there is no exact launch date for UPI in Nepal. Many sources have quoted estimated dates but these things take time and cross-border work is a huge challenge because it has the big challenge of data security and payment security for both countries. So all in all UPI launched in Nepal is just in the news but in reality, it is cooking. We will update if there is a certain date from a very reliable source such as NRB, RBI, or, the Indian Embassy.
Mobile Apps for UPI in Nepal
This is one of the most asked questions. People usually ask ‘How to use Google Pay in Nepal?’ or ‘How to create a Paytm account in Nepal?’ These are genuine questions because many people want to pay INR on various sites or to various people and merchants. However, anyone who is telling or publishing that you can download apps such as Google Pay, Phonepe, Paytm, BHIM UPI, MobiKwik, BHIM SBI Pay, and create a UPI ID in Nepal using a Nepali number is just misinforming.
Currently, none of the Indian UPI-based apps or wallets work with Nepali numbers because the system is not live yet and those Indian companies don’t operate here. So we will explain in the future how to create a UPI ID in Nepal and how to use UPI in Nepal when it becomes feasible with Nepali numbers.
However, as per our assumption, Nepali apps such as eSewa, Khalti, YONO Nepal SBI, Connect IPS, and bank apps should get the UPI feature stagewise because Fonepay has already made an agreement with NPCI. As Fonepay is in almost all mobile wallet apps in Nepal, the feature should come in all apps. Nepalese companies already have good cover in Nepal and obviously, they want to maintain their users. UPI in Nepal is primarily for cross-border payment and not domestic payment because we already have NCHL, National Payment Switch (NPS), and wallets for that. So apps will just provide UPI for India-Nepal payments.
How do some people use UPI in Nepal: Indian Way
Many YouTube videos show people using apps such as Google Pay and Paytm in Nepal. Those are all using Indian SIM cards. Most students and people who work in Nepal have Indian SIM cards and Indian bank accounts. So they use their Indian SIM and Indian bank account to make UPI payments from Nepal. People use Indian SIM in Nepal with international roaming and just use UPI from Nepal. After the launch of the proper system, Nepalese people will be able to use UPI from Nepali mobile using Nepali apps and Nepali bank accounts.
Conclusion
UPI has proved to be a revolutionary technology in India. Similarly in the case of Nepal also, it is a historic project that will change the digital payment landscape. It will provide seamless, safe, and cost-effective cross-border transfers for citizens of both countries. It will definitely help developers, travelers, tourists, hotels, small shops, pilgrims, and all Indian or Nepalese people who travel to each other’s country. It would also open up new prospects and benefits for Nepalese users and businesses. This will also strengthen economic and bilateral connections between India and Nepal.
