Virtual Credit Card Gaining Popularity in Nepal

The Fonepay Virtual Credit Card, launched by Citizens Bank International during its anniversary in April 2024, has quickly gained popularity in Nepal. Although initial expectations were modest, the number of users surpassed 10,000 within just 15 months.

Currently, six financial institutions, four commercial banks and two development banks, are offering this service.

According to Fonepay’s Chief Operating Officer, Paras Kunwar, consumer response to the product has been “extremely encouraging.” He noted that the success of the virtual card has further motivated the company to invest in digital financial solutions.

While credit cards themselves are not new in Nepal, the concept of a fully digital, app-based virtual credit card, one that eliminates the need for plastic cards, swipe machines, and physical paperwork, is an innovation in the country’s financial sector.

This card is stored within the user's mobile device and can be used at a wide range of merchants, from five-star hotels to local grocery stores in remote areas like Jumla, via Fonepay’s QR network.

Reversing the Traditional Model

Conventional credit cards in Nepal have traditionally targeted high-income urban customers and required physical bank visits, income documentation, and manual processing. In contrast, the virtual credit card has disrupted this model.

Users only need to complete a one-time KYC process and activate mobile banking. After that, they can apply for the credit card directly through their mobile device. Once approved, the card appears in the app and can be used instantly via Fonepay QR codes.

Although Nepal Rastra Bank has capped digital credit limits at Rs 500,000, individual banks set their own internal ceilings based on customer evaluations. At Citizens Bank, for example, credit limits range from Rs 20,000 to Rs 250,000.

A Digital Revolution in Card Usage

According to Fonepay, over 10,000 virtual credit cards have been issued so far, with transactions totaling nearly Rs 500 million. The company has invested Rs 210 million in rolling out this service.

Most banks in Nepal still rely on global payment networks like Visa and Mastercard to issue physical credit cards, which require lengthy application processes, physical card handling, and POS machine dependency.

The virtual credit card removes all of these steps. Users can apply online and get instant approval through mobile banking, making it a more convenient and secure alternative. “As a replacement for plastic cards, the virtual credit card is easier and safer,” Kunwar explained. “Once issued, users can transact with over 1.7 million Fonepay-affiliated merchants across the country.”

A Cardless Future?

As of mid-June 2025, Nepal Rastra Bank reports that 14.15 million payment cards are in circulation nationwide. Among these, 13.5 million are debit cards, 314,000 are credit cards, and 246,000 are prepaid cards.

Sudesh Khaling, CEO of Everest Bank, called the virtual credit card a new practice in Nepal’s electronic payment space. “It eliminates the need to carry physical cards or search for POS machines,” he said.