In a landmark development, the Unified Payment Interface (UPI) is now live for cross-border transactions between India and Nepal. This follows a tie-up between the NPCI International Payments Ltd (NIPL) and Fonepay Payment Service Ltd, Nepal’s largest payment network, in September last year.
What is UPI and how does it work?
UPI is an instant payment system developed by the National Payments Corporation of India (NPCI) that allows users to transfer money between bank accounts using a mobile app. Users can link multiple bank accounts to a single UPI ID and use it to scan QR codes or enter virtual payment addresses to make payments.
UPI has emerged as one of the most popular payment methods in India, with over 3.5 billion transactions worth Rs 6.4 lakh crore in February 2024. UPI offers several benefits such as low cost, high speed, convenience, security and interoperability.
How can Indian consumers pay Nepalese merchants using UPI?
According to an official statement by NIPL, Indian consumers can now scan QR codes to make payments to Nepalese merchants using UPI-enabled apps. Merchants acquired by the participating members of Fonepay Network can seamlessly accept UPI payments from Indian customers.
Fonepay is a digital payment platform that connects over 50 banks and financial institutions in Nepal and provides QR code-based payment solutions to over 1.5 lakh merchants. Fonepay is also a member of the Asian Payment Network (APN), which aims to promote regional payment integration and interoperability.
What are the benefits of this partnership?
The integration of payment systems by NIPL and Fonepay marks a revolutionary shift in cross-border transactions between citizens of both countries, ushering in a new era of convenience and efficiency. The partnership will enable Indian consumers to make UPI payments across various business stores in Nepal such as hotels, restaurants, retail outlets, e-commerce sites, travel agencies and more.
The partnership will also boost trade, commerce and tourism between the two nations, as well as foster greater financial inclusion and economic prosperity in the region. According to the Ministry of External Affairs, India is Nepal’s largest trade partner, accounting for 27% of its exports and 65% of its imports in 2020-21. India is also the largest source of foreign tourists for Nepal, with over 2 lakh visitors in 2019.
Ritesh Shukla, Chief Executive Officer of NIPL, said, “This initiative not only signifies our commitment to innovating the digital payments space but also reflects our dedication to creating new avenues for trade, strengthening the bond between the two nations. We envision this partnership as a catalyst for greater financial inclusion and economic prosperity in the region.”
Diwas Kumar, Chief Executive Officer of Fonepay, expressed his confidence that this cross-border payment solution will significantly improve economic ties, commerce and tourism between the two nations, eventually promoting economic prosperity and progress. “The seamless cross-border payment solution aligns with our commitment to drive digital economy to the greatest height, and we anticipate a positive ripple effect on both local and regional economies,” he said.
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