Lack of QR licences limits banks' role in fast-growing digital payments market
KATHMANDU, DECEMBER 14
Commercial banks have raised concerns over what they describe as an uneven regulatory environment in Nepal's digital payment sector, alleging that Nepal Rastra Bank (NRB) has stopped issuing QR code licences to banks while favouring a handful of private operators.
NRB, which oversees the stability and security of the national payment system, currently issues payment system operator (PSO) licences only to entities such as Fonepay, Smart Swiss Technology and Nepal Clearing House Ltd for QR-based transactions. Banks argue that this policy compels them to depend on third-party QR platforms for digital payments, undermining their autonomy in an increasingly competitive market.
According to bankers, NRB had earlier categorised commercial banks as holding both PSO and payment service provider (PSP) licences. However, several officials within the central bank allegedly shifted policy in recent years, effectively restricting banks from acquiring QR licences.
"If other institutions can provide QR services free of cost, banks can do the same. There is no justification for denying banks the opportunity to operate QR-based payment systems," said an executive from a leading commercial bank, requesting anonymity.
He added that with smartphone penetration rising and digital transactions growing rapidly, banks are being deprived of a fair role in the QR ecosystem. "This is about ensuring a level playing field. NRB should review its policy and allow banks to participate meaningfully in QR-based payments," he said.
Dependence on third-party QR platforms
Bankers argue that reliance on external QR providers places institutions at a strategic disadvantage. Their technological upgrades, system reliability and service improvements become tied to the priorities of another operator.
Any downtime or service limitation on the provider's side can directly affect banks' performance and customer experience, they say. Moreover, all integrations with PSOs must be routed through the third-party platform, resulting in delays in launching new features or digital innovations.
Banks also claim that using another provider's QR system weakens their visibility at merchant touchpoints, while a portion of transaction revenue is diverted to the external platform.
Without direct control over merchant data, industry players say banks find it difficult to introduce targeted offers, credit scoring models, micro-loans, loyalty schemes or insurance products. This limits opportunities to support small businesses and restricts broader ecosystem growth.
Industry insiders further argue that building bank-owned QR infrastructure would contribute to domestic job creation in technology, field support and fintech partnerships, while enhancing transparency, auditability and fraud monitoring.
NRB's position
NRB, however, maintains that the regulatory architecture is intentionally designed to separate the roles of PSOs and PSPs.
"As per existing laws and NRB directives, PSOs and PSPs have distinct responsibilities, and both licences cannot be issued to the same entity," said NRB Officer Kiran Pandit. "This structure helps mitigate concentration risks, settlement vulnerabilities, conflicts of interest and concerns around data integrity."
Booming digital payments industry
According to Precedence Research, the global digital payments market is valued at USD 170.24 billion in 2025 and is projected to surge to USD 701.51 billion by 2034, growing at a compound annual rate of 17.09 per cent.