Nepal Rastra Bank (NRB), the central bank of Nepal, introduced critical revisions to its online payment regulations in response to increasing digital payment fraud. This step was prompted by the growing number of scams targeting digital transactions, with a rise in related police cases. Kiran Pandit, Executive Director of NRB's Payment Systems Department, emphasized the need for stronger measures to safeguard online payment systems.

Key Changes to E-Commerce Payment Regulations

To combat the escalating fraud, NRB has required payment service providers to implement settlement guarantee funds or similar mechanisms. These initiatives are designed to manage credit risks and ensure greater security for digital transactions. By doing so, the central bank aims to build consumer confidence in e-commerce platforms and enhance the overall reliability of digital payment systems in Nepal.

Enabling International Digital Payments

In addition to the fraud-prevention measures, NRB made significant strides towards facilitating international digital payments. In mid-2024, the bank approved a Merchant-to-Person (M2P) payment system, which allows Nepali Payment System Operators (PSOs) to partner with international PSOs for cross-border retail payments. However, these international collaborations must receive prior approval from NRB to ensure compliance with local regulations, ensuring the safety and integrity of these transactions.

Positioning Nepal in the Global Digital Economy

These updates are part of NRB's broader vision to modernize Nepal’s payment infrastructure. By improving the security of digital transactions and encouraging international payment partnerships, NRB aims to position Nepal as a more competitive player in the global digital economy. This is expected to lead to greater economic growth by enhancing the efficiency and scope of digital payments, benefiting both businesses and consumers in the country.