(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. 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, Nepal Clearing House Limited (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 transactions are mostly of low value.  And most of the merchants connected to the BFIs and PSPs are of commercial category. Supply-side merchants are yet to utilise the online payment system. Thus, the Small & Medium Enterprises (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.

On the other hand, there is a need to bring interoperability between different banks and financial institutions as well as PSPs by connecting them into the National Payment Interface (NPI). The interoperability shall substantially reduce the investments and efforts each BFI or PSP needs to put in and also enhance the acceptance of cross BFI and PSP services.

Another challenge is to convert non-conventional organisations into the merchants who would accept e-payments as alternate to bank deposit or cash payment. Convincing the non-conventional organisations and put necessary infrastructure along with necessary procedures in place is a challenging job. It does not make business sense for these types of organisations to become merchants of different service providers and they would not do so. The option would be to provide an interoperable platform which could be utilized by all BFIs and PSPs linked to NCHL.

Once the corporates and business houses start using e-payments, the transaction limits need to be enhanced and it requires the Settlement Guarantee Fund to be created to meet the transaction volumes and values. Without having a proper guarantee mechanism in place, it would not allow the majority of the participants to optimize the usage of e-payments and foster the digital payments in the country.

Sakchyam Intervention

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

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 the SMEs 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 People-to-People (P2P), People-to-Government (P2G) and Government-to-People (G2P) payments.


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


As of March 2021, NCHL has on-boarded:

  • More than 404,757 connectIPS users
  • 52 bank and financial institutions onto connectIPS e-payment system
  • 6,212bank branches
  • 12Payment Service Providers (PSPs)
  • 22government/semi-government/large institutions in the NPI

The average daily transaction of NPI: NPR 1.05 billion with over 3,500 transactions