If you are into FinTech, you might have heard about Nepal's Card Payment Switch. And it has finally gone live with the launch of the Nepal Pay card. So without further ado, let's get into all the information about Nepal's Card Payment Switch and its benefits for the overall economy.

Nepal's Card Payment Switch Overview:

What is a Payment Switch?

Before getting to the main news, first, let me give you a preface of a Payment Switch. So basically, it's a software system that connects payment mediums and financial institutions to route electronic payments. You can say, it's the middle agent between a payment gateway and financial institutions. And that way, a Card Payment Switch does the same thing for all the card transactions.

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National Payment Switch in Nepal

Nepal Clearing House Limited (NCHL) is the operator of the National Payment Switch under the initiative of Nepal Rashtra Bank (NRB). NPS does all the routing and settlement of retail transactions to ensure interoperability of card and non-card-based payments within Nepal. It includes Retail Payment Switch (RPS) for handling retail (non-card) based transactions and retail instruments, whereas National Card Switch (NCS) includes card switch and domestic card scheme. RPS includes NepalPay Instant, NepalPay QR, NepalPay Request, and such which you can see on the ConnectIPS app. It has been active since November 2021.

The Launch of the NepalPay Card

And now we have the card payment switch also available through the launch of the Nepal Pay Card. The event was held on Monday by NCHL with the presence of hon' NRB governor Maha Prasad Adhikari and delegates from commercial banks of Nepal. Under this domestic card scheme, customers will soon be able to obtain Debit Cards, Credit Cards, Prepaid Cards, and Virtual Card Services. All those card processing and routing data will be served in domestic servers, cutting the need to route through an international server, which was the case with VISA and MasterCard cards. NCHL is also seeking to enable the NepalPay card for international payments in the near future.

Acquirement of NePS by NCHL

NCHl acquired Nepal Payment Solutions (NePS), which was the operator of VISA-based EMV cards in Nepal. NCHL has been operating national payment systems related to non-card-based infrastructures for the last 15 years, whereas, NePS has been providing card processing services for the last 11 years. This is the first Payment Service Operator (PSO) merger in Nepal. With this merger, NCHL has developed the National Card Payment Switch as well as a domestic card scheme under NPS. Now NCHL has a paid-up capital of over NPR 1.07 billion with a total reserve of NPR 1.44 Billion.

What can we expect with a Domestic Card Payment Switch?

Right now, Nepalese BFIs (Banks and Financial Institutions) are using payment switches of foreign companies like VISA, Master Card, and Union Pay. So, that's why your Debit/Credit Card comes with one of the aforementioned branding. So, we can say, that Nepal was using a non-domestic intermediary for the time being with routing fees going outside of the country. And the operation fee was high which is incurred upon the bank customers, through annual card charges and such. So, with the launch of a domestic card payment switch, the routing fees will be reduced. So, the NEPALPAY Debit/Credit cards will incur lesser annual charges. Plus, it will ensure that the routing, clearing, and settling data stays within our country.  

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Use case of NEPALPay cards

NEPALPAY cards can be then used in both ATM booths and Points of Sale. Himalayan Bank and Machhapuhre Bank have shown a demo in the launch event itself. Currently, your Debit/Credit card switches through international payment gateways. And as aforementioned, Nepal Pay cards will soon be enabled to do international payments as well. So, this might open a way for the billing done in Nepali Price Rupees (NPR) on App Stores and in-app purchases, if NRB and the respective App Stores make a deal. For the domestic scene, the use of a domestic card switch will reduce the overall operational and card fees as well. In this way, it will be a win-win situation for both BFIs and customers alike.

Nepal's Card Payment Switch Launch and Availability

The Card Payment Switch and Domestic Cards arrived on the 31st of March 2025. If you are wondering, Nepal Pay cards will be available in the starting phase from these BFIs: NMB Bank, Citizens Bank, Goodwill Finance Limited, Muktinath Development Bank, Prabhu Bank, Sanghrila Development Bank and Siddhartha Bank.