Encouraging Digital Payment Amid Covid-19-Rudra Adhikari


April 23, 2020
Since the outbreak of Novel Coronavirus in the late December from the Wuhan city of China human life has been affected globally. The spread of Coronavirus disease COVID-19 in the geometric ratio throughout the world is adding more and more challenges day by day making the situation much excruciating. As per the latest update of worldometers.info (April 23, 2020, 12:29 GMT ) , out of 2,658,794 cases 185,440 people have been killed with cases found in 210 countries and territories around the world and 2 international conveyances. Apart from public health, it is has been exhibiting several socio-economic impacts. One of such sectors which is most affected is the banking sector.
Banking sector in Nepal more rely on traditional payment methods dealing with cash transactions. Though the officials of World health Organization (WHO) refused to accept that banknotes would transmit COVID-19, nor they had issued any warnings or statements about this (Refer: https://www.marketwatch.com/story/who-we-did-not-say-that-cash-was-transmitting-coronavirus-2020-03-06), news in social media became viral citing WHO said that Coronavirus transfers rapidly from person to person via the paper currency. In this context, people are making cash transactions fearfully. Next, many countries around the world including Nepal are adopting “Lock Down” approach to minimize the possible spread of Coronavirus and people are facing troubles to reach bank counters to make cash transactions. So, in this scenario, digital payment can be taken as a best alternative to combat with COVID-19.

Digital payment is a way of paying for goods and services digitally thus replacing traditional methods of paying via Cash or Cheque. This includes all the mobile and web applications following a secured and authorized payment gateways. Almost all the Bank and Financial Institutions (BFIs) of Nepal had launched their own web and mobile banking applications. Apart from banking applications the common digital wallets like E-Sewa, Khalti, FonePay, iPay, QPay, IMEPay, PrabhuPay etc. are also providing several online payment services in Nepal which are directly or indirectly dependent on bank accounts. One can load amount on his/her digital wallet either from his/her bank account directly through e-banking/internet banking or mobile banking or using his/her debit /credit card or depositing cash on the specified accounts going to the bank.
Along with the facility of transferring amount from bank account to the digital wallet or vice versa, the facilities like electricity bill payment, drinking water bill payment, internet bill payment, mobile top up, digital TV payment, air, bus & cable car online ticket booking, online shopping and various other utility payments are commonly available in such digital wallets and banking applications. One of such applications i.e; Connect IPS; an application developed by Nepal Clearing House (NCHL) enable government transactions, so that users can pay government tax, revenue or similar charges via online transaction. It means people should not travel to bank and offices to make payments. This helps to avoid crowds which is essential to be safe from Coronavirus infection.
Although the penetration of the digital payment system users is comparatively very low in Nepal, it is growing day by day. As a positive impact of COVID-19, BFIs should utilize the current period to encourage digital payment and boost the volume of customers using digital payment techniques. For the same purpose Nepal Rastra Bank (NRB), the regulating body of BFIs in Nepal, had issued a circular to the BFIs to make arrangement of the availability of digital payment services free of cost at present. Similarly, Nepal Bankers Association (NBA) has also decided to make arrangement of providing 24*7 hours support to customers to resolve the problems and queries associated with their applications. It will motivates the customers to use digital payment methods and helps to increase the customers’ trust on BFIs that they could provide reliable services which is very essential in strengthening the BFIs and customers’ relationship.

Recently, NRB had also changed the transaction limit of various digital transaction mediums. Now the transaction limit of Mobile Banking including QR Code Payment has been set to NRs. 1 Lakh per day and NRs.10 Lakhs per month with NRs. 20 thousand per transaction which was NRs. 50 thousand per day and NRs.2 Lakhs per month with NRs. 20 thousand per transaction before. The transaction limit of ATM Debit / Credit card has been set to NRs. 1 Lakh per day and NRs.30 Lakhs per month with NRs. 20 thousand per transaction which was NRs. 60 thousand per day and NRs.18 Lakhs per month with NRs. 20 thousand per transaction before.
Similarly, the transaction limit of Wallet to Wallet, Wallet to Bank Account and vice-versa has been set to NRs. 1 Lakh per day and NRs.5 Lakhs per month with NRs. 25 thousand per transaction. Also, the transaction limit of Internet Banking has been set to NRs. 10 Lakh per day, NRs.30 Lakhs per month for Merchant Payment and NRs.50 Lakhs per month for account transfer. The agent or sub-agent payment has been set to NRs.25 thousand per day and NRs. 1 Lakh per month.
As per the latest provision, the customers can swipe their cards on any banks’ ATM booth and no extra charge would be taken for this. Likewise customers should not pay any service charge for Real Time Gross Settlement Service (RTGS), Connect IPS, E-banking, Mobile banking & any other digital payment methods. This is a grand opportunity for the customers to make extensive use of digital payment taking an advantage of minimizing health risks avoiding the crowd.
Once the customers start using digital payment medium, it is very convenient and less time-consuming compared to traditional methods of paying through Cash or Cheque. Similarly, it reduce transaction costs as the people should not have to travel banks or paying parties’ place frequently. Other advantage of making digital transaction is that it increase sales of goods or services.
There are few disadvantages too; such as security concerns and disputed transactions. Although stringent measures such as symmetric encryption are in place to make e-payment safe and secure, it is still vulnerable to hacking. Similarly, if someone make unauthorized transactions using authorized channels it becomes harder to settle the dispute. Also, to keep secured systems banks and enterprises have to spend more which increases the business costs.
As the banking sector in Nepal is seeking opportunities for boosting up their digital products, it might be a good opportunity for them. Encouraging digital payment reduce the hardcopy workloads in one hand and helps to combat with Coronavirus disease COVID-19 in the present days. However, challenges are still there as the security concerns may make people reluctant to use digital payment systems. In this condition BFIs and system developers should take the customers in faith and provide efficient & reliable services.
(Writer Adhikari is an IT professional currently working in Rastriya Banijya Bank who regularly writes about current issues)