SCOPE AND FUTURE GROWTH OF E-COMMERCE IN NEPAL

Sushmita K.C

PUSOB, MBA 3rd

E-commerce is the process of buying and selling of goods and services, over an electronic network, through the internet. E commerce is now major part of the Internet. Many Countries and Companies have started selling online, and started Home delivery, online payment, satisfaction guaranteed, and money back returns are provided by e-commerce companies for trusted and quality products over the internet. In past recent years due to education and reach to Internet among the many people in Nepal has brightened the future of E-commerce. The interest of students in the field of IT and the growth of IT companies has helped a lot in the awareness and interest in youths for Internet and IT. This has directly created more opportunities to uplift E-Commerce in Nepal.  It is noted that 63% of total population uses internet service in Nepal. This status proves that there is a good scope of E-Commerce in Nepal.

With the introduction of new technologies, digital stores and interactive apps, there is a big boost in sector of e-commerce. Many online portals and shopping portals are being launched. They are doing good business along with providing the best services. They provide festival offers and various discounts to customers. A large number of people in Nepal stills think twice before purchasing online. Despite of the technological advancement, security is still a concern in people’s mind. Various frauds and scams are hampering the growth of e-commerce in Nepal .As per growth of e-commerce in foreign land it's obvious that in Nepal also e-commerce business is growing but still it has not come up-to the point it was meant to be. Many obstacles are there which i will be mentioning in the following paragraph. Many of us are aware or not but most of the buyer from internet in Nepal usually order through social sites like Facebook or Instagram where you can only order but not online payment. Payment can be done only after we receive what we order i.e. cash on delivery.

v  Current practices of eCommerce in Nepal

Many online portal and shopping portal are launched. Peeping into the future of Ecommerce, launch of few large online shopping portals was thought as milestone, everyone thought there will be turnaround in the E-commerce industry in Nepal. Now having dozens of virtual Nepali stores in web, they still have the same problem of payment and belief of people, they still have a level of trust to build among the visitors. Some of the successful companies playing a vital role in the growth of this industry are mentioned below:

1. Kaymu(www.daraz.com.np)

2. Sastodeal (www.sastoderal.com)

3.  Foodmandu (www.foodmandu.com)

4. Muncha (www.shop.muncha.com)

5. Metrotarkari (www.metrotarkari.com)

Payment types used by online shopper in Nepal are:

1. E-sewa

2. I pay

3. Hello paisa

4. PayBill

5. Online Banking

v  Difficulties and Challenges of e-commerce in Nepal

Talking about the difficulties of e-commerce in Nepal here i have listed some of the main problems:

1. Lack of trust: Imagine buying shoes which look awesome in the photo but real douche when delivered, it will certainly not give a good feeling. And once the trust is broken, it takes an awful lot of time to regain it.

2. Lack of awareness: With lack of basic computer knowledge with major of Nepal's population there is lack of awareness among them that there exists a world where you can get everything online just by using simple e-commerce sites. I think knowledge must be spread out and people must be known about the facilities.

3. Lack of competitors: When there is no competition at all its obvious that the price will be high. Reason for less competitor is people not taking initiative and lack of risk bearing capacity. It is believed that in Nepal online shopping is expensive and people rather prefer to go in shop and buy rather in internet.

4. Lack of an effective Payment Gateway: Now main problem about e-commerce business in Nepal is facing is payment gateway. Let me tell you briefly about payment gateway. Payment gateway is nothing more than paying the price of goods online. In Nepal we don't have system where we could pay online. We are even restricted for doing the international shopping. Until and unless our country's responsible people take a step forward and help dealing with a bank for legal and secure process of payment gateway we Nepalese still have to dream about international shopping. Soon or later it has to come so why not early?

5. Lack of Investment: Unlike in most of the countries, hedge fund and Venture capital fund are very few in Nepal or are non-existent. When it comes to investment in the e-commerce sector it is practically non-existent with some exceptions. Also, the startup culture hasn’t gained much momentum which has resulted in the insolvency of the startup in the e-commerce sector.

v  Future of E-commerce in Nepal

The future of e-commerce business in Nepal is very much brighter. When after finally payment gateway's problem is solved then there start's the rise of scope of e-commerce in Nepal. Since people already have started taking innovative idea of creating a online wallet system through which we are enabled to do many online shopping and online marketing at least locally within the country. There will be many e-commerce sites through which people will be benefited with many aspects here are a couple of e-commerce websites like Muncha and Thamel.com which started the business with the turn of the century. These sites mostly focused on sending gifts to relatives in Kathmandu from abroad. But after 2010, when the internet and communication took a giant leap with the rise in Android phones and cheap internet, e-commerce started to emerge. Use of technology will grow rapidly where even we Nepalese can be a creator in technology field as well which is totally in the minimal volume in the present context. I hope technology will grow so rapidly that even groceries will be possible to do online. It's not that wallet system hasn't brought change in e-commerce in Nepal. Obviously people has done good job after creating wallet but still wallet is not enough for international shopping. Until payment gateway's problem will be solved we Nepalese still have to rely on what we have i.e wallet like eSewa, Goji, Khalti, etc.As far as business e-commerce is concerned, it needs two main thing to operate they are Device (Computer, Mobile, Tablet, etc) &Internet (To surf the web or app). So as the above suggests, Nepalese people have now got both Internet & device widely. It is, therefore, a strong E-commerce business market and clever Investors and Businessmen knew this at the right time. With the growing generation every business will have to adapt and think their online existence in future depending on the nature of business.

Ø  Some benefits of e-Commerce:

1. Reduce effort and time consumption.

2. Price will be standard for all the customers.

3. Easier to compare prices.

4. Lots of choices.

5. All time reachable.

6. Reduce employee costs.

v  SWOT analysis of E-commerce

In SWOT analysis here we try to find out the strengths and weaknesses of e-commerce in respect of Nepal business environment. Then after we try to identify opportunities presented by that environment and the threats posed by that environment.

2.1 Strengths:

Ø  Global market: E-commerce biggest strength is the boundary less access in other word no brick structure is mandatory to do business or no specific boundary is required. It enables all the companies to expand them to global level. The widening of geographic retail markets may facilitate the development of global retailers.

Ø  Time saving: Transaction through internet is no doubt very fast. It saves time by reducing physical movement.

Ø  Price/Product comparison: Information and to choose are some of the right which every consumer has. On the same footing e-commerce provide platform to consumers to compare price and product effectively and efficiently. It will tend to have far greater bargaining effectively and efficiently.

Ø  Flexible target market segmentation: The success of business depends on right choice of segmentation. Target market segment here in e commerce is flexible can be modified any time.

Ø  Faster buying procedure: The buying is just a click away from the seller. No physical movement is required, no hunting of right product at right price is to done by the consumer this make the buying process faster.

2.2 Weakness:

Ø  Security: Security is a biggest challenge in to progress of e commerce. Customer always found themselves insecure especially about the integrity of the payment process.

Ø  Fake websites: Many fake websites are available on net which promises better service and secure dealing. These web sites can not only disgrace e-commerce but also bring bad name to e-commerce. 

Ø  Fraud: Personal and financial details provided for trading purpose are misuse by hackers their personal undue interest.

Ø  Fewer discounts and bargaining: Hardly online businesses offer discounts and bargaining cannot be possible.

Ø  Long delivery timing: The task of Delivery is usually outsourced, who do not care about the timing of the seller. They provide their services as per their own convenience. Sometime the delivery time may extend to days or weeks which one cannot wait for.

Ø  Impossibility of physical examination: Products whose choice is merely depend on its physical condition of the product with need personal touch before selection are not suitable for e-commerce business. As Online products cannot be touched, wear or sit on the products.

Ø  Limited advertising: Limited advertising opportunities are available because in e commerce one cannot go for mass advertising. The advertising is limited only to computer literate person. And out of them only those who are comfortable with e-commerce applications. 

Ø  Customer’s satisfaction: There is no physical and personal or direct face to face interaction between customer and the seller. Therefore the scope of convincing the customer does not exist.

2.3 Opportunities:

Ø  Changing trends: People are very brand conscious. They are interested in buying branded stuff rater then local.  E- Commerce is fast and effective even financial transactions can be made from any part of the world. People of tomorrow will feel more comfortable to buy products through internet only.

Ø   Increasing number of user: Daily number of internet users is increasing. People feel more comfortable to shop online.

Ø  Regular Global expansion: E commerce can be operated anywhere any time without any interruption. It always has a scope of expansion. All new population and existing population who

are not the user of e commerce are the target expansion.

Ø  High availability (24 hour and seven days a week): Along with each and every click of the mouse business is in operation. Those who are busy in day time and cannot spare time for them self, have all the opportunity to shop as per their convenient time.

Ø  Wide business growth: E business has wide scope and broader vision to grow. Business always took place in gap. Gap filling is a never ending process hence the growth of business is also never ending process.

2.4 Threats:

Ø  Competitors: Along with local competition, global competition also exists. Competition is increasing day by day. Big companies have already entered in this field. They are making people habitual at the cost of their companies.

Ø  Changes in environment: Change in trends, fashion and fad can distress E Commerce.

Ø  Privacy concerns: Fears that information can be misused lead to spam e mail or identity fraud.

Ø  No direct interaction: In e commerce there is no direct interaction between customer and the seller. There is no scope of bargaining. People prefer to buy physically as compare to online to experience personal feel.

Ø  Fraud: Persons using unfair means to operate e-commerce can damage the confidence and faith of common people.

Ø  Risk: Nature of fraud.

v  Recommendation for E-commerce business in Nepal

 Today or tomorrow anyhow the problem of payment gateway will be solved. It's not and never that there will be no payment gateway but till the problem is solved i would like big name and fame companies to start a bright initiative ideas and sites for e-commerce in Nepal which would bring the revolution in Nepal at the field of technology. We must always be active on the development, process and business policy and strategy on E-commerce business in Nepal. Now, its time to go online, sell online, Payments should be easy. Every individuals trust must be built by business owners.

REFERENCE

http://blog.webcreationnepal.com/2018/09/scope-of-e-commerce-in-nepal.html

https://risingjunkiri.com/the-scopes-and-challenges-of-e-commerce-in-nepal/

http://ecommerceinnepal.blogspot.com/2017/11/ecommerce-challanges-opportunities.html

https://rinkugopali.blogspot.com/2017/04/ecommerce-in-nepal-challenges-and.html

https://webpreneurshub.com/future-ecommerce-business-nepal/

https://www.ripublication.com/aeee_spl/aeeev4n6spl_19.pdf

Future of E-commerce Business in Nepal

Sanina Shrestha

Gagangaunda, Kaski- 30

Electronic commerce is the buying and selling, marketing and servicing of products and services via computer networks. E-businesses utilize the internet, intranets, extranets and other net-works to support their commercial processes. Since e-business includes the process of transacting with suppliers and customers there is an overlap in activities with e-commerce. Although the terms ‘e-business’ and ‘e-commerce’ are often used synonymous, the distinction between them lies in the border range of processes in e-business that incorporates internal transaction within an organization. These include transactions relating to procurement, logistics, supply chain managements, payments, stock control and tracking. Ecommerce can be best being conceived as a subset of e-business where the two concepts overlap is in the buying and selling of products and services. Electronic business can be defined as the use of the internet to network and empower business process, electronic commerce, organizational communication and collaboration within a company and with its customers, suppliers and others stakeholders. The term ‘e-business’ was coined by IBM’s marketing and internet terms in 1996. Business over the email and web by communicating, buying and selling with customers, suppliers and others its stakeholder. In simple terms, e-business means doing business over the internet. This drastically changes the manner of doing business. For centuries, business has been based on physical presence of buyers and sellers and physical delivery of goods and services. In e-business refers to any forms of business transaction in which the buyers and sellers interacts electronically using telecommunication networks.

When we talk about the future of E-commerce business in Nepal, online buying and selling at beginning are same people are not aware about the e-commerce business. Nepal being a third world country it has always been a step backward when it comes to Internet & Technology. But with the latest technology trends in Nepal, things have been changing over the past few years. After the development of technology and internet e-commerce business are in increasing trend. Due to which there is increase in economic condition in Nepal. To talks out past days when people had to go to Telephone shop to call a local number because very few of us carried mobile at that time. But now people have their own self phone. In Fact, Many of youths these days prefer chatting on the internet these days which is of course cheaper than traditional phone calls & messages. When it comes to E-commerce business in Nepal, It’s not a new thing in Nepal. In fact, online business in Nepal has been running for more than 7 years. There are more than 20 e-commerce portals in Nepal till date. However, if we see data, none of them have been quite successful when it comes to ROI (Return in Investment). Manly there are four reasons behind this Firstly, Lack of proper address. People here in Nepal do not have proper communication in between each other’s which lacks proper addressing for their business. Secondly, lack of awareness among people about online business. They do not know about the online benefits like how fast their business can run through it and how the buying and selling process can be done through it. In addition is lack of targeted marketing. People are not aware about the market tends and the customers need and wants in the market. Finally due to not so good internet connection in the country, connection problems like slow service, networks, system and the skills manpower to run the internet’s and technologies.

However things have changed in fast few years. With the increase in trend in mobile phones available, good internet broadband and Telecommunications’ cheap Internet rate, people are using the internet these days in Nepal. The Internet penetration in Nepal has crossed 50% in the last year, which literally means that more than half of the populations of the country are using top internet services which have given the positive impacts in e-commerce business in Nepal. As far as E-commerce business is concerned, it needs two main things to operate:

 – Device (Computer, Mobile, Tablet, etc)

 – Internet (To waves the web or app).

Nepalese people have now got both Internet & device widely. It is, therefore, a strong E-commerce business market and clever Investors and Businessmen knew this at the right time. Due to which the e business is increasing in our country day by day. E-commerce is literally killing off the bricks and shutter stores with its exploding offers, a wide range of products, free shipping, social media access, quality, discounts, convenience and what not! Be it via mobile or tablet computer, the list of the orders have become never-ending and in a developing country like Nepal, luckily e-commerce has established a pretty good market.

Future Consequences of E-commerce Business in Nepal

1.      Tough competition

The E-commerce business in Nepal is definitely going to take its height after the development of devices and internet. Since e-commerce business has been increasing in Nepal, there might be the tough competition in between each others. We should not forget that there are already some existing E-commerce business in Nepal like Sastodeal, Foodmandu, Muncha, Nepbay many more which are already well established and doing good in their position. 

2.      Advantage to Customers

Market competition always yields some attractive deals and offers for customers. With the increase in competition creates a safe, secure & transparent business environment. This will also increase in product quality and competitive pricing. As people have more choices, they tend to shop more and that ultimately brings in a favorable market condition. Customers don’t have to go to shop for buying, they can do online shopping directly from home and can fulfill their need and demand which give advantages to the customers.

3.      Fast Delivery

This will be an added advantage of customers after a competitive ecommerce business environment in the country. For example esawa has already announced free 24 hrs delivery as soon as it launched and many of such fast delivery are still in the process.

4.      Online Payment

With all those advancements in the digital wallet in Nepal these days, the online payment system is likely to take a rise sooner. While people usually rely on cash on delivery (COD), buying and selling are certain to change in near future.

5.      More Employment Opportunity

In long run, E-commerce business in Nepal has potential to create a lot of employment opportunity to Nepalese people in the near future. Whether it comes to corporate people or middle and unskilled manpower, E-commerce needs them all. With increased competition in the market, it is probably going to create an impact on local people both in terms of customer experience and employment. It is going to be a win-win situation for the local people.

6.      Time Saving

Online business helps to save the time of the people. They don’t have to go outside to buy their needs and wants. With the help of online they can order by sitting at home which ultimately save the time of the peoples.

 Message to E-commerce Startups

After the proper development of devices and internets in the E-commerce market in Nepal, It is first important to take a advantages and not to misjudge any brand all the time. It is now time to upgrade yourself and build a brand because brand matters at last.

Some of the points that Small Business owners & Startups can follow to compete for a large venture:

1.      Focus On Quality & Pricing

Nobody is going to check or buy any product if that product is poor in quality. It is therefore always important to maintain a standard quality of the product if you’re based online. Price is the first thing that people see with the product image. So, it is important to keep a ready for action pricing with the market at affordable by the customers.

2.      Digital Marketing

It is now time to prioritize digital marketing for our business. We can’t long last if our business is not based on Internet and we don’t care of our Digital Presence. So, startups can focus on Digital marketing to grow their ecommerce business online.

3.      Focus On Branding

Branding is now the most important thing than. An average person is likely to see or hear about a brand at many times before they make any purchasing decision till they become satisfied with the product. We can imagine how important Branding has been over the years. It is, therefore, suggested to work on your business branding from now for a long run.

4.      Customer Relation Management

Our business can be ruined by negative reviews and we should not take them lightly. We live in an online world and everything happens within a blink of the eye. So, it is important to keep an eye on our customers. From good product and price we can make our customer happy but with a good Customer relation, we can make them satisfied and turn them into a loyal customer which is a benefit to any organization.

5.      Economic Growth:

E-business initiatives may include to expand business reach, attain higher level of market visibility, increases responsiveness, design and deliver new services, strengthen business relationships, reduce cost and to prevent or resolve channel conflicts. It increases the productivity of firms and enhances the economic welfare of consumers.

Challenge to Startups

If you are thinking about a startup in E-commerce industry in Nepal, we have to be ready for more struggles now. Some of the challenges are as follows:

1.      Traditional Shopping Habit:

To go to the markets, chat with vendors, bargain to the fullest and get things done. Guess what, e-commerce isn’t for them. Ordering something they can’t touch, feel or bargain doesn’t appeal to them despite many of the youngsters love doing so.

2.      Lack of trust:

Imagine buying shoes or any product which look awesome in the photo but in real it looks different when delivered, it will certainly not give a good feeling. And once the trust is broken, it takes time to trust it again.

3.      Lack of Investment:

Country like Nepal, when it comes to investment in the e-commerce sector it is practically non-existent with some exceptions. Also, the startup culture hasn’t gained much thrust which has resulted in the insolvency of the startup in the e-commerce sector. 

4.      Lack of an effective payment gateway:

Even though various online payment services like esewa, Khalti, ipay are prevalent in Kathmandu and few cities, they have not been effective since most of the people are still doubtful about them. Also, most of the Nepali still do not possess bank accounts and are ignorant about e-banking.

5.      Lack of e-commerce friendly rules:

An e-commerce business based on Nepal cannot open a PayPal account until it has a dollar account abroad. Also, the long technical process and unstable economic policy of Nepal Rastra Bank are the major problems.

We don’t shop from a website which is backed up by some millionaire. All we see is the product quality, price & delivery. And if the shopping experience is good, we visit the same website again. It is as simple as that. So, for startups & small business owners, it is extremely important to focus on their branding and pursue their importance of e-commerce business in Nepal to overcome the challenges.

 Conclusion

E-business is the result of convergence of information technology and communication technology. It is a comprehensive system of trading which uses networks o computers for buying and selling goods and services. It gives the possibility for customers to access the prices at any time of the day every day. The way of ordering is easy, fast and immediate. E-commerce business provides benefit to organization, production as well as to customers. Benefits like more flexible infrastructure, enhanced business intelligence and information management, better and faster decisions are provided in organization. Benefits like Higher efficiency, leaner value chain, higher employee engagement, reduces costs are provided in production. Likewise, more effective and efficient marketing programs, streamlined order fulfillment, improved customer services are the benefits to the customer after the development of e-business. E-commerce Business in Nepal has been taking a right turn in the recent past and one can imagine the future with these. At one hand Nepal is trying to expand its reach in all over the world in which Nepali market are definitely going to try to surprise with its E-commerce service. That helps in increasing the economic condition of the nation. Since Nepal is a good front line for E-commerce vendors, one can go to any limit to earn customer trust and loyalty. This will not only create a good business environment but also be helpful for future startups & Entrepreneurs. So, these were all about the latest acquisitions and the possible consequences in the E-commerce business in Nepal. As mention above if tough competition, advantages to customers, Fast delivery, online payments etc goes on increasing than the future e-commerce business can take a good advantages in Nepal too. If these trend go on increasing in e-commerce than Nepal can get lots of benefit in development sector. 

References:

https://kathmandutribune.com/future-nepals-online-shopping-palm-hands-list-top-online-shopping-sites-nepal-must-see/-online-shopping-palm-hands-list-top-online-shopping

       https://webpreneurshub.com/future-ecommerce-business-nepal/

       https://www.quora.com/What-are-the-challenges-for-ecommerce-in-Nepal

Digital wallet service providers in Nepal and NRB's Transaction limit on Digital Payments.

                               

In the context of Nepal concept of digital wallet started in 2009 AD after the launch of eSewa by F1 Soft International. The introduction of eSewa revolutionized the concept of digital payment in Nepal. Since then Nepal has seen different digital payment service providers. These days the digital payment system provider are increasing in numbers day by day providing the same kind of services. So, we can say that such provider are mushrooming in Nepal with not so differentiation. The digital payment systems like esewa, Khalti, IME Pay, QPay, iPay etc. are struggling on their own in this competitive market.

As per Nepal Telecommunication Authority’s latest MIS report, the country has over 132% mobile telephony penetration and 59% broadband internet penetration. Likewise, NRB’s latest statistics show that over 6 million people use mobile banking in Nepal, and the number of internet banking users is around 1 million. On the other hand, as per WorldBank’s 2018 Data in financial inclusion, only 45.4% of Nepal's population have accounts on banks. So, digital payments system like esewa, Khalti,IMP pay, Prabhu pay, Qpay, Ipay can play a significant role to bring unbanked population to digital platform and provide financial services.

Some of the popular digital payment system provider

Esewa

Developed by F1soft, eSewa is Nepal’s most popular digital wallet. Its number of users has been flourishing every year. With eSewa, online transactions have become astonishingly easy. Users are able to buy anything from mobile top-up, movie tickets to flights through the service and all of it through some easy clicks from a gadget. 

With esewa it is easy to book movie ticket from major multiplexes like QFX, BigMovies, BSR Movies, View Cinemas Butwal, F-Cube Cinemas etc which accept payment via eSewa. As for the flight ticket booking, both domestic and international flight tickets can be booked using the eSewa wallet. For domestic air ticket bookings, eSewa has partnered with some of the most frequently used airline services like Yeti Air, Buddha Air, Saurya Air, Shree Air, and Simrik Air. Meanwhile, popular online shopping portals like Threadpaints.com, Sastodeal.com, and Smart Doko have also teamed up with eSewa, providing the digital-wallet with a scope that no other company can boast.

The services provided by eSewa do not end there. Users can save themselves the misery of long and sluggish utility queues, by conveniently paying their monthly bills online. Internet bills, newspaper subscriptions, and telephone bill payments can now be done online. And though limited to a few places, eSewa has also added electricity bill payments to its lineup of services. The mobile top-up facility has also made easiness to people regarding recharge.

Khalti

Khalti was launched by a team of young entrepreneurs on 26 January 2017 and since then it has been focusing to impact the lives of people through its innovative technology and services. NRB has provided license to the Khalti, Khalti team is encouraged to take financial services to the next level. Khalti is playing its part in driving the push for a cashless digital ecosystem, constantly expanding its lineup of services and pushing other providers to up their game as well. In order to lure users to Khalti, the service has rolled out various generous offers, bonuses and cash-backs on transactions.

Initially, it was available only for Android and web platform. Now you can get this wallet for iOS devices as well. It has been providing with the services for DTH payment, ISP payment along with other popular merchant payments. You can get tickets for movies in almost all popular movie hall chain. It has extended its services to pay the water bill in places outside Kathmandu as well. The reason for its growing popularity has been the added services in almost every field possible. In some cases of airline ticketing, you can get more bonus than its competitors.

It is easy to load your Khalti wallet using different bank accounts. The popularity graph for this digital payment provider has gone up massively and it continues to grow in recent time. Apart from the regular services given by digital wallet, Khalti has partnered with OYO hotel chain recently. You can book more than 30 hotels from OYO chain in Kathmandu and Pokhara. There is a facility to pay for different event tickets via scan. Khalti is almost shoulder-to-shoulder with eSewa.

IME Pay

IME pay, is a mobile money service offered by International Money Express (IME) that can be linked to accounts at a range of banks and supports both face-to-face (offline) and remote (online, e-commerce) payments at a range of merchants and billers. Customers can also load or withdraw cash at an IME pay agent location.

 IME Pay offers a wide range of payment gateway for its users. The services available from this app include airline ticketing, bus ticketing, utility payment, remittance, ISB payment, Telephone bill payment etc. The digital wallet is also giving you tickets for Chandragiri Hills Cable car. You can enjoy your digital life that is hassle-free with no queue and no penalty for delay. You can simply do your work sitting at home or even when you are at the go.

NRB's New Directive on Digital Payment System.

Nepal Rastra Bank (NRB), the central bank of Nepal has issued a new directive on 17^th June 2018 imposing ceilings on digital transaction in Nepal. The major objective behind the new directive of Nepal Rastra Bank is to systematize the digital payment system in Nepal considering all sectors concerned and international norms. NRB has raised transaction limits on digital banking and payments.

As per the latest directive on 17^th June 2018 from Nepal Rastra Bank:

1.        Banks and financial institutions are allowed to issue pre-paid card facility of up to Rs 100,000 at one time, and users of pre-paid card may withdraw Rs 500 to Rs 25,000 in one transaction and up to Rs 50,000 per month.

2.        Debit card users can withdraw a minimum of Rs 500 to the maximum of Rs 25,000 at a time, up to Rs 100,000 in a day, and a total of 4 transactions in a day.

3.        Credit card users will be allowed to withdraw cash only up to 10 percent of the credit limit. However, credit cards cannot be used for cash transactions.

4.        Using Mobile Banking, you can make payment of up to Rs 50,000 in a day and Rs 100,000 in a month.

5.        Similarly, using internet banking, you will be able to make payment of up to Rs 10,00,000 in a day and Rs 30,00,000 in a month. Also, you can make the transfer of Rs 10,00,000 at a time and up to Rs 50,00,000 funds in a month using internet banking.

6.        Likewise, using digital wallets like esewa, Khalti, IME pay you will be able to able to make payment of up to Rs 25,000 a day and Rs 50,000 in a month. You can top-up up to Rs 5,000 at a time, Rs 25,000 in a day, and Rs 50,000 from Agents and Sub-Agents (eg.esewa pasal, khalti pasal), and make transactions in the same volume.

7.        You can transfer an amount ranging from Rs 100 to Rs 5,000 at a time to your digital wallet from bank account, and up to Rs 25,000 in a day. Your wallet cannot hold more than Rs 50,000 at a time.

8.        It mandatory for all users to fill up KYC (Know Your Customer) form to carry out transactions above Rs 5,000. As digital wallet is a new technology in Nepal, no such limitations were imposed earlier.

Limits on digital transaction after NRB's New Directive.

Method of Transaction	Transaction Limit at a time	Daily Limit	Monthly Limit
Digital Wallet (eg.esewa, khalti)	Rs5,000	Rs25,000	Rs50,000
Mobile Banking & QR Code Payment	Rs5,000	Rs50,000	Rs100,000
Internet Banking (Merchant Payment)		Rs10,00,000	Rs30,00,000
Debit, Prepaid Cards (Withdraw or Payment)	Rs25,000	Rs100,000
Kiosk Machines	Rs5,000	Rs25,000	Rs50,000

Impacts of new directive on digital transaction in Nepal

The volume of mobile banking transactions is showing an uptrend in Nepal and similar is the case for payments using digital wallets. Digital Payments is slowly starting to become a habit, especially among the young population. However, the new restrictions imposed on internet banking and mobile wallets are sure to directly impact online payment and e-commerce growth in Nepal.

Digital wallets are largely viewed as a preferred mode of fund transfer for small value and to promote digital transactions in Nepal among people who cannot easily open a bank account, especially those in rural areas.

Some of the advantages of digital payments are:

• ·        Convenience & accessibility: Customers no longer need to carry cash or visit an ATM. In fact, they don’t even need to be physically present to pay! Customers can pay anytime from any part of the world.
• ·         Lower risk: Digital transactions are much more secure than traditional transactions because they are processed by secure gateways which are hard to tamper with.
• ·        Easily traceable: Details of payments are stored in a merchant-specific databases. Both merchants and customers have easy access to payment information. This avoids ambiguity and confusion while tracking payments.

This new regulation might discourage the growth of digital transaction in Nepal, which is still at a budding stage. Regulatory body should make the necessary provision for IT audit rather than imposing restriction on the digital payment. Such limits and restriction will lead our economy towards traditional economy in future and also make impact on the digital and cashless Nepal dream. One thing that could penetrate digital payment in people's life is none other than awareness program to the public regarding use of digital technology. Nepal Government as well as the Digital payment service provider must focus on such awareness activity under CSR.

In the present context, there are numbers of digital payment service provider in market. So, we can say the digital payment service provider are mushrooming in Nepal with not so differentiations. Due to which, none of them can sustain well in the highly competitive market. So, either merging or doing different will definitely give them a competitive advantage over others. There is also a role of government and NRB is to regulate and encourage such payments service provider by which customer would be benefited in terms of credibility and quality in service.

References:

https://www.nrb.org.np/psd/directives/Threshold_Limit_20750331.pdf

https://www.unsgsa.org/files/3815/2511/8893/LDB_Financial_Inclusion_2018.pdf

https://kathmandupost.com/art-entertainment/2017/11/07/digitising-the-nepali-wallet

https://techsathi.com/best-digital-wallets-in-nepal/

https://www.nepalitelecom.com/2019/03/top-mobile-wallets-online-digital-payment-providers-in-nepal.html

http://blog.khalti.com/fintech-trends/nrb-limits-on-digital-transaction-in-nepal/