F or decades, Nepalis relied on international payment giants like Visa and Mastercard for card-based transactions. But now, that dependence is set to change with the launch of NEPALPAY Card—Nepal’s first domestic payment card scheme. Developed under the National Payment Switch–National Card Switch (NPS-NCS) initiative, the system’s infrastructure is now fully operational, according to Nepal Clearing House Limited (NCHL).

On March 31, Nepal marked a major milestone in financial sovereignty with the unveiling of the NEPALPAY Card. The launch of the scheme by Maha Prasad Adhikari, outgoing governor of Nepal Rastra Bank (NRB), demonstrated the readiness of the NPS-NCS infrastructure. In a historic test transaction, a NEPALPAY card issued by Himalayan Bank was successfully used at a Machhapuchhre Bank POS terminal and a Siddhartha Bank ATM. This marked a historic moment for Nepal, aligning it with a growing number in domestic financial technologies to strengthen economic independence. Unlike many countries that lack their own card schemes, Nepal’s adoption of NEPALPAY sets it apart as a leader in digital self reliance among emerging economies. The NPS-NCS infrastructure includes a centralized settlement and dispute management system, an AI/ML-based fraud and risk management framework and a domestic transaction routing system.

How NEPALPAY Works

The NEPALPAY Card operates through NCHL’s National Payment Switch, a centralized domestic system that processes transactions entirely within Nepal. Unlike international cards—where payment data is routed overseas for verification, often adding 5–6 seconds to ATM withdrawals—NEPALPAY keeps all data routing within the country. This not only speeds up transactions but also cuts operational costs by eliminating cross-border processing fees. The system is interoperable, meaning the card works seamlessly across all ATMs and POS terminals across the country.

For NEPALPAY to succeed, banks and financial institutions (BFIs) must adopt the system by integrating their systems with the NPS-NCS. Progress is already underway, with NCHL signing principal membership agreements with institutions such as Citizens Bank International, Goodwill Finance, Himalayan Bank, Machhapuchhre Bank, Muktinath Bikas Bank, NMB Bank, Prabhu Bank, Shangri-La Development Bank and Siddhartha Bank. “So far, 15 banks and financial institutions have signed agreements to join the platform, with an additional 21 or 22 in the approval process,” Pradhan said.

The card will be available in multiple formats, including debit, credit, prepaid and virtual cards, offering the same convenience as global cards for ATM withdrawals, POS purchases and online payments. The key difference lies in its domestic infrastructure, which enables lower costs and ensures data sovereignty.

Economic Benefits

One of the primary motives behind the launch of NEPALPAY is to reduce the financial burden imposed by international payment networks. Currently, Nepali banks and consumers pay substantial fees to networks like Visa and Mastercard. For interbank ATM transactions, customers are charged Rs 15 per transaction, of which Rs 10 to Rs 12 is paid to international networks, depending on exchange rates. For POS transactions, banks lose 0.5% to 0.7% per swipe—approximately Rs 30 to Rs 45 for a transaction of Rs 6,000 to Rs 6,500. Additionally, banks pay hefty affiliation fees, ranging from $50,000 to $80,000, just to participate in these global networks.

Collectively, Nepali banks pay nearly Rs 2 billion annually to international networks, a significant outflow for an emerging economy. Moreover, banks incur losses on each transaction, as the cost of processing, maintaining infrastructure, and providing customer services ranges from Rs 20 to Rs 22 per transaction, exceeding the Rs 15 fee set by NRB. NEPALPAY changes this equation by cutting out intermediary fees.

“Payments processed through international providers incurred additional fees, but a domestically operated card will eliminate those costs,” Adhikari said during the launch. The savings are expected to bolster Nepal’s economy, enhance digital financial inclusion and support small businesses by reducing transaction costs. Additionally, retaining payment data within Nepal enhances cyber security and reduces exposure to international data breaches.

Challenges Ahead

While the NEPALPAY infrastructure is ready, its commercial success depends on the preparedness of individual banks. “We have readied the platform, but banks must now adapt their internal systems, obtain certifications and integrate with the national switch,” Pradhan explained.

The certification process is in its final stages, with a phased rollout planned to ensure smooth implementation. Banks will adopt the system progressively rather than simultaneously, allowing for careful integration and troubleshooting.

Building public trust and ensuring nationwide usability are critical for NEPALPAY’s success. Pradhan acknowledged that widespread adoption requires seamless functionality and robust security measures. “We need to ensure that the card is accepted across Nepal while maintaining international compatibility,” he said. “Strengthening security and preventing fraud will be essential moving forward.” Over the next five years, NCHL plans to invest Rs 500 to Rs 600 million in developing the NEPALPAY ecosystem, focusing on hardware, human resources and system enhancements. While the card scheme is a domestic initiative, key components like chips and switch systems will be sourced from international providers, reflecting the need for global collaboration to achieve local goals.

What Experts Say

Fintech specialists view NEPALPAY as a transformative step for Nepal’s financial sector. “Not every country has its own card scheme,” said Sanjib Subba, a fintech expert. “For an emerging economy like Nepal to introduce one is commendable. But for it to succeed, consumers must perceive real value.” Subba said, adding that NEPALPAY needs to offer competitive features, such as loyalty programs, rewards and seamless user experiences, to rival international cards.

Subba also predicted increased competition in Nepal’s payment market, drawing parallels to India’s RuPay, which prompted Visa and Mastercard to lower fees and innovate. “Foreign card networks may respond to NEPALPAY by adopting new strategies,” he said.

To stay competitive, NEPALPAY must prioritize high security standards, global certifications, and system resilience. “There should be no compromise on infrastructure, security or connectivity,” Subba added.

A Vision for the Future

The launch of NEPALPAY marks an important step in Nepal’s pursuit of financial sovereignty, promising to reduce reliance on international payment networks, save billions in fees and promote digital inclusion. As a symbol of digital modernization and economic self-reliance, NEPALPAY has the potential to transform how Nepal transacts—anchoring payments firmly within national borders. “This is only the beginning,” said Pradhan. “Now we must build trust, ensure reliability and make NEPALPAY a part of everyday life for every Nepali.”

(This news report was originally published in    May 2025   issue of New Business Age Magazine.)