KATHMANDU, NOVEMBER 12

Travel and tourism are driving growth and employment across the world. By 2033, the industry is expected to be worth $15.5 trillion and account for 11.6 per cent of the global economy, according to Bloomberg.

The integration of digital payment solutions is profoundly reshaping the travel and tourism landscape, allowing tourists to make secure and fast transactions, possibly encouraging them to prolong their stay and even return again and again.

The introduction of cross-border payment options like QR codes compatible with India's UPI-based systems, such as PhonePe, Google Pay, and Paytm, has made a considerable difference, especially for Indian tourists, who account for a significant portion of Nepal's international visitors.

According to the Nepal Tourism Board, with digital payment systems now widely accepted, local businesses are seeing increased customer spending, with QR-based payment systems being a game-changer for smaller businesses, especially those in remote areas along popular trekking routes. By embracing digital payments and other tech solutions, Nepal can position itself as a modern, tourist-friendly destination that meets global standards.

Deepak Raj Joshi, chief executive officer of Nepal Tourism Board (NTB), shared with The Himalayan Times his insights on the evolution of tourism industry in Nepal with introduction of cross-border payment options, response from tourists, challenges and opportunities, as well as the way forward. EXCERPTS:

THT: How has the role of digital payment systems evolved in Nepal's tourism sector, particularly with the introduction of cross-border payment options for tourists?

Digital payment systems have drastically transformed Nepal's tourism landscape, moving it from cash-dominated transactions to a modern, efficient, and cashless approach. The introduction of cross-border payment options like QR codes compatible with India's UPI-based systems, such as PhonePe, Google Pay, and Paytm, has made a considerable difference, especially for Indian tourists, who account for a significant portion of Nepal's international visitors. This compatibility eliminates the need for currency exchange or handling large sums of cash, making travel more convenient, safer, and more enjoyable for Indian tourists. The ability to seamlessly pay digitally for everything-from hotel bookings and local transport to dining and shopping-encourages them to explore more and spend more freely, which benefits the entire tourism ecosystem in Nepal.

THT: How has this shift impacted local businesses catering to tourists?

The impact on local businesses has been substantial and overwhelmingly positive. With digital payment systems now widely accepted, local businesses-including hotels, restaurants, shops, and even smaller vendors-are seeing increased customer spending. Digital payments bring several advantages: they reduce the complexity of handling cash, streamline transactions, and provide greater transparency and security. This is particularly beneficial in popular tourist areas like Kathmandu, Pokhara, and Lumbini, where cashless transactions have become increasingly popular among tourists. Moreover, these systems offer valuable data on spending patterns, allowing businesses to adjust their offerings and services to better cater to tourists' preferences, ultimately enhancing customer satisfaction.

QR-based payment systems are a game-changer for smaller businesses, especially those in remote areas along popular trekking routes. Vendors who previously operated on a cash-only basis can now accept payments via mobile wallets, broadening their customer base and reducing the logistical issues associated with cash transactions. This shift is bringing even remote businesses into the formal economy and enhancing their ability to engage with international tourists.

THT: How have Indian tourists responded to these digital payment options during their visits to Nepal?

Indian tourists have embraced these payment options enthusiastically. Familiarity with digital wallets like PhonePe and Google Pay has enabled a frictionless travel experience, enhancing their comfort and reducing the stress of dealing with currency exchange. Whether it's settling hotel bills, dining out, paying for local transport, or purchasing souvenirs, tourists appreciate the convenience and ease of digital transactions, which are quick, secure, and seamless. This familiarity also builds trust, reinforcing Nepal's image as a progressive, tourist-friendly destination.

Additionally, introducing digital payments has encouraged tourists to spend more as they no longer feel restricted by the amount of cash they carry. This boost in spending is beneficial for local businesses and the broader tourism economy, creating a positive cycle of increased tourist engagement and satisfaction.

THT: What feedback have you received from businesses within Nepal's tourism sector regarding the impact of digital payments on customer behaviour?

Feedback from the tourism industry has been very positive. Many businesses have observed that customers will likely make larger purchases and spend more freely when digital payment options are available. This is especially true for international tourists, who prefer the convenience and security of cashless transactions. Hotels, restaurants, local shops, and vendors have all noted that digital payment options improve customer satisfaction and increase spending. By reducing cash handling, these businesses also experience fewer security risks and operational challenges, which allows them to focus more on customer service.

Moreover, local entrepreneurs, particularly in tourist-heavy areas, report that digital payments have opened up new opportunities. For example, QR payments have empowered small vendors and artisans to engage more effectively with tourists. This shift is creating a more inclusive tourism economy by allowing even the smallest businesses to benefit from the spending power of both domestic and international tourists.

THT: What are some specific examples where digital payment options have increased tourist engagement or spending in local businesses?

There are several examples where digital payments have directly impacted. In cities like Pokhara and the Kathmandu Valley, hotels, guesthouses, and tour operators who offer digital payments via eSewa, Khalti, and international systems like Visa and MasterCard have reported a marked increase in bookings and customer engagement. The ease of online bookings and secure digital transactions has encouraged tourists to make last-minute reservations and explore off-peak options, which helps to balance tourist traffic throughout the year.

Trekkers can now use digital payments to purchase trekking permits, gear, and local supplies in the Everest region. This convenience has boosted sales for local shops and guesthouses along trekking routes as tourists no longer need to carry large amounts of cash. In Lumbini, a primary cultural site, the ability to make donations and purchase cultural souvenirs digitally has increased engagement and sales, benefiting local artisans and religious institutions.

THT: How crucial is it for Nepal to continue adapting its financial systems to support international visitors?

Nepal needs to continue modernizing its financial systems. Today's tourists, particularly those from India, expect a seamless, secure payment experience that aligns with what they're accustomed to back home. Offering cross-border payment options, especially for our closest and largest market-India-reduces barriers and creates a positive travel experience, directly encouraging more spending. Moreover, digital payments bring increased transparency and security, which builds trust and enhances Nepal's appeal as a safe, tourist-friendly destination.

THT: What challenges remain in integrating digital payments into Nepal's tourism infrastructure?

While progress has been substantial, challenges remain, particularly in remote and rural areas where internet access is inconsistent. Many of Nepal's famous attractions are in these areas, and tourists often rely on cash. Expanding digital infrastructure and promoting digital literacy will be essential for making these payment systems widely accessible. Educating small, cash-reliant vendors on the advantages of digital payments could help them transition smoothly, making the system more robust and inclusive.

THT: What role do you see improved payment systems playing in encouraging repeat visits from tourists, especially from India?

Improved payment systems play a significant role in encouraging repeat visits, particularly for Indian tourists. When visitors experience a smooth, hassle-free way of transacting, it leaves a lasting positive impression and makes them more likely to return. The convenience of using familiar payment options like UPI allows Indian tourists to explore Nepal without the usual worries of currency exchange, which can be a barrier. This seamless experience, combined with the security of digital transactions, makes Nepal a desirable destination for future visits.

Furthermore, as businesses gain insights into tourist spending habits, they can develop personalized offers and loyalty programs that enhance value for returning visitors. This level of engagement can create a sense of connection and familiarity, encouraging Indian tourists to come back and explore more of Nepal's offerings.

THT: How might digital payments promote lesser-known destinations within Nepal?

Digital payments make it easier for tourists to access remote areas without carrying large amounts of cash, encouraging travel beyond the major tourist cities. For example, tourists can now use mobile wallets to pay for accommodations, transportation, and services, even in areas like the Everest and Annapurna regions. This accessibility supports local economies in these areas by enabling smaller businesses, such as homestays and local shops, to serve a broader customer base, ultimately helping to promote and develop lesser-known destinations.

Moreover, digital payment systems allow local tourism boards to gather data on tourist spending, which can inform targeted marketing strategies for under-visited regions. By promoting digital payment incentives and creating packages tailored for specific destinations, Nepal can diversify tourist traffic and elevate its profile as a destination that offers unique experiences beyond the traditional tourist routes.

THT: What initiatives is the Nepal Tourism Board (NTB) taking to educate local businesses on digital payments?

The NTB has proactively educated local businesses about the advantages of digital payments. We've organized training workshops, partnerships with payment providers, and awareness campaigns to ensure businesses, especially those in rural or tourist-heavy areas, understand how to integrate digital payments into their operations. These efforts are aimed at helping companies, from large hotels to small vendors, see the tangible benefits of going digital. Enhancing their capacity to manage digital transactions ensures the entire tourism ecosystem is aligned with modern traveller expectations.

THT: Looking to the future, how do you envision the evolving relationship between technology and tourism in Nepal?

The future of tourism in Nepal will increasingly rely on digital innovation. Technologies like mobile apps, QR payments, and data analytics will enhance visitor experiences and make travel more accessible, convenient, and enjoyable. By embracing digital payments and other tech solutions, Nepal can position itself as a modern, tourist-friendly destination that meets global standards. This shift promotes sustainable tourism and ensures that Nepal remains competitive in a rapidly evolving tourism market.