Central bank plans National Payment System
The central bank is planning to launch National Payment System that will help mobile banking more adaptable to masses. The central bank is also mulling to make remittances inflow Nepal through the system that will make it cost efficient.
The system that could make interoperability between bank accounts will initiate and direct the transfer of funds between the accounts of payers and payees at financial institutions.
The system is expected to provide effective mechanisms for the exchange of money between the transacting parties, according to the central bank that is adopting a strategic approach to reform the payments system in the country.
The system also aims at achieving a safe and efficient national payments system. The central bank also claimed that it will take the front seat to reform the overall payment infrastructures for transacting and clearing payment instruments starting from legal framework to enable the circulation of money by providing circuits for effecting payments, domestically and internationally.
Currently, according to the central bank, the interoperability between different financial institutions is limited, despite the existence of interbank card-based switching and clearing services being provided by several institutions.
According to the central bank, SmartChoice Technologies (SCT) – that has 84 members and currently operates around 1,500 ATMs and 2,500 Point of Sales terminals, with some 1.7 million cards issued – is the largest of payment service provider. But there is still settlement risk as SCT’s fund settlement is undertaken at a commercial bank, which might have difficulty in meeting all the obligations stemming from all debit card transactions, the central bank study revealed, adding that the National Payment System will make government collection and disbursements fully integrated as it will also cover welfare payments like social security allowance, apart from revenue mobilisation.
Currently social security allowances are mostly distributed in cash. But recently, the government has decided to pay social security allowances through banking channels.