NRB makes licence mandatory for payment service providers

Kathmandu, July 11

Nepal Rastra Bank (NRB), the central monetary authority, has paved the way for telecom companies to set up subsidiary firms to provide online and mobile payment services to their clients.

This means telecom companies, such as Nepal Telecom and Ncell, can now establish firms, like e-Sewa, Hello Paisa and iPay that provide online and mobile payment services. This move, according to NRB, is expected to benefit rural population that are deprived of payment services.

But to be able to provide such services, companies must acquire licence from NRB and maintain minimum paid-up capital of Rs 10 million, says the Licensing Policy for Payment Service Providers and System Operators just introduced by NRB.

Firms providing online and mobile payment services using the internet or cellular phones have been operating in the country for years. But so far these firms did not have to seek NRB’s permission prior to offering payment services to the public. This void often raised questions on safety of people’s money being handled by these companies.

With the introduction of the licensing policy, NRB will now officially function as oversight agency for such companies and monitor and regulate their businesses.

The licensing policy says all payment service providers, including domestic money transfer companies and firms like e-Sewa, and payment system operators, such as clearing houses and companies, like VISA, MasterCard and SCT, must obtain licence from NRB if they want to continue operating their businesses.

However, special provisions have been created for foreign companies providing payment services or operating payment systems in 10 or more countries. These facilities include waiver on the need to maintain minimum paid-up capital and park one per cent of the paid-up capital as security deposit at NRB.

The licensing policy has made it mandatory for all firms providing payment services and operating payment systems to deposit one per cent of the paid-up capital in security deposit account of NRB.

Also, the policy has made it mandatory for firms providing payment services to maintain minimum paid-up capital.

For instance, minimum regulatory paid-up capital for firms providing payment services through electronic cards has been fixed at Rs 50 million. If firms are issuing electronic cards that can be used abroad for payment purpose, then such companies must maintain minimum regulatory paid-up capital of Rs 250 million, says the policy, adding, foreign firms providing payment services in Nepal must maintain a minimum paid-up capital of Rs 300 million.

Minimum paid-up capital for payment system operator, such as SCT or Nepal Clearing House Ltd, on the other hand, has been fixed at Rs 100 million.

Policy highlights

  • All payment service providers, payment system operators must obtain licence from NRB
  • Telecom companies can set up subsidiary firms to provide online and mobile payment services
  • All firms providing payment services, operating payment systems should deposit one per cent of paid-up capital in security deposit account of NRB
  • Special provisions created for foreign companies providing payment services or operating payment systems in 10 or more countries