How it Started
In the last decade, Nepal has made great strides towards implementing digital banking services. Historically a country whose citizens are most comfortable using cash, the move to digital transactions is now a reality. With an internet penetration rate of over 72% – most of which can be attributed to internet use on mobile phones – the willingness and ability to use digital banking services is higher than it has ever been. The year 2002 saw Nepal’s first e-banking services, followed soon by SMS banking services accessible on mobile phones in 2004. Despite slow-moving and often restrictive government regulations, there are now over 8 million mobile banking customers in Nepal.
The jump from digital banking to habitually using digital transactions has been painfully slow. Again, near-sighted government regulations such as policies forcing a low maximum limit for daily and monthly digital transactions, hindered the growth of digital payments in many sectors. In addition to this, these services often only reach the young, urban population, leaving those in rural areas with little to no options for digital banking and payments.
How it’s Going
Digital payments and banking companies have only in the last fifteen years emerged to become key players in Nepal’s developing payments market. Launched in 2009 by fintech startup F1 Soft, the mobile wallet eSewa aims to “simplify payments, promote digital payments and expand financial inclusion for Nepalese people.” It’s license in 2017 from the country’s central bank, Nepal Rastra Bank, paves the way for other banking services companies. The platform is simple and easy, with users making payments either online through the app or SMS or through a registered eSewa agent. Other companies such as Khalti and FonePay have followed the same pathway to integration, presenting more opportunities for Fintech for Health partnerships in Nepal.
Digital Nepal Framework
One of the biggest barriers for digital payments companies has always been low adoption rates, especially in rural areas. There is a general lack of trust due to recent data breaches and individual digital literacy overall remains low. To address these concerns and implement consistent national policies, Nepal has created the 2019 Digital Nepal Framework. This framework is designed to enable Nepal to harness its growth potential by leveraging disruptive technologies and driving socioeconomic growth. The framework identifies eight key sectors – among them healthcare – on which government resources and focus will be placed to unlock innovative digital solutions to address growing challenges.
National Payment Gateway
The framework also serves as an overall roadmap for making government-related, and in time all payments, cashless in the near future. With the reins handed over to Nepal Rastra Bank (NRB), the implementation of the national payments system is slow-going and wrought with bureaucratic struggles. However, the information technology infrastructure has already been put into place and at least five major banks will be linked to the system. In addition, Nepal Clearing House has recently created ConnectIPS to enable government-related payments as well as funds transfers. While a national system is still in the works and its reach to remote areas is expected to be poor, stakeholder engagement and buy-in is high and implementation of the a national gateway is now in sight.
The Impact of COVID-19
The ongoing pandemic shines a light on the necessity of digitization. Hit particularly hard by COVID-19, the Nepalese people have adapted to better function in our new normal by using more digital services. Both rural and urban citizens now use digital wallets for more than just ticketing and online payments, with wallets now seen as the safest method of paying for groceries, courier services, electricity bills, and ridesharing. Since the start of the pandemic, eSewa has seen a 35% increase in users, bringing their entire user base to 3.5 million people. Another mobile wallet, IME Pay saw a growth of 25% between March and August 2020, with more than 60% of these new users from semi-urban and rural parts of Nepal.
Opportunities Presenting Amid the Pandemic
As seen in many countries, digital payments have proven to be a safe and easy way to transact when it comes to paying for everyday items and services. As a result of the pandemic, ease of use of these platforms has quickly improved in Nepal. For example, surcharges were dropped for use of ATMs, Real Time Gross Settlement Services, ConnectIPS, and e-banking and mobile banking services. In addition, NRB has increased transaction limits for daily and monthly mobile transfers in an effort to minimize health risks and make digital transactions a more normal way of life for the Nepali people. Stakeholders should capitalize on these changes which should remain in place even after the pandemic.
Looking to the Future
In Nepal, we are just now discovering the many opportunities for Fintech for Health. In a country still defining the parameters of digital banking and payments, the possibilities for healthcare entities to collaborate with fintech toward the goal of equitable, affordable, accessible healthcare for all can now be realized. As the pandemic subsides, we can see where – when time, energy, focus, and finances are put to work – necessary and effective advances can be made to make healthcare more accessible and affordable. In alignment with Digital Nepal Framework and with the promise of a National Payment Gateway, Fintech for Health moves forward in Nepal with eagerness and excitement.
Anushruti Adhikari, Nepal Institute for Policy Research
Valerie Shelly, ACCESS Health International SE Asia