(A partnership between UKaid Sakchyam and Nepal Clearing House Limited)


The online payment system is slowly gaining popularity in Nepal. Banks and Financial Institutions (BFIs) and Payment System Providers (PSPs) are the major service providers. The payment system of the BFIs is account based while the PSPs follow the wallet based payment services. However, most of the transactions taking place through these mediums are of low value, mainly utility and bill payments.  At the same time, merchant payments are also not high with not a considerable traction in fund transfers. Another major issue faced by the online payment system is the interoperability between the various BFIS and PSPs.

An automated clearing system called NCHL-IPS was launched in 2016 to process bulk transactions like remittance, salary, pension, customer payments, vendor/party payments, dividend, Government payouts and various fees.  In 2018, NCHL launched a single payment platform called connectIPS e-Payment which aids account to account fund transfer and also works as a gateway for creditor/merchant payments. After enrolling in connectIPS e-Payment and linking his/her bank account, a user can initiate transactions directly from his/her bank account. Available in web and mobile app versions, connectIPS allows a user to link more than one bank accounts under the same user name.


At present, the connectIPS e-Payment system is limited to individual customers and thus the transactions are mostly of low value.  And most of the merchants connected to the BFIs and PSPs are of commercial category. There is also a huge lack of supply-side merchants utilising the online payment system. Thus, the SMEs and corporate houses, for whom automated payment transactions can be of great use, are still working on a paper-based payment system as they don’t have options to integrate with banking channels.

The banks and PSPs handle both issuance and acquiring a business, with each of the stakeholders investing in their own payment infrastructure and arrangements for customer acquisition, merchant acquiring and transaction processing. This requires heavy investment in all such activities but the transactional revenue is on a downward trend, and as a result, the ROI on such investment is very thin or very low.

Most of such transactions are being promoted by the banks/PSPs are initial promotional schemes. And with the increase in the licensed PSPs and other alternate channels from BFIs, there is high likelihood that there will be pressure on the revenue models of all such instruments with limited importance given to the customer awareness for electronic payments.

Sakchyam’s Intervention

Keeping in mind the constraints and challenges that digital payment mechanism is going through, UKaid Sakchyam Access to Finance is partnering with NCHL to generate momentum for the growth of the electronic payment system in the country by bringing the conventional and non-conventional institutions into the digital payment ecosystem.

The project has identified the following activities to reach its intended goal:

  • Facilitation for promotion, awareness and training of the connectIPS e-Payment to expand the system as Corporate Module/ Channel and thus incorporate to the small and medium institutions for processing their payments through the alternate channel.
  • Development and rollout of National Payment Interface (NPI) to set up consolidated interfaces of connectIPS and NCHL-IPS system
  • Expansion of Settlement Guarantee Fund (SGF) to mitigate the settlement risk of mobile and web-based financial services and scale-up the volume and value of electronic payments

The project aims to accelerate the Government’s vision towards establishing a strong digital economy by boosting the digital payment ecosystem that supports P2P, P2G and G2P payments.

As such, the project is also in line with Sakchyam’s objective to support the accessibility of digital financial services on a nationwide level.


By the end of this partnership in July 2020 the project aims to achieve the following:

  • Integrated mobile and web-based payment services to 200,000 bank customers (20% youth/ 20% women) and 100 SME/corporates
  • Onboarding of additional 20 government/semi-government/large institutions in the NPI
  • Enrollment of 45 service providers in the connectIPS e-Payment
  • Onboarding of 60 BFIs with 4,000 branches
  • 11 orientations supported by 21 training programmes