KATHMANDU: The government has proposed a comprehensive amendment to the Payment and Settlement Act, 2075 to make Nepal’s digital payment system secure and international.
The amendment bill registered by Finance Minister Dr. Swarnim Wagle in the Federal Parliament proposes new conditions for foreign investment payment providers, mandatory testing (sandbox) before releasing new technology and providing liquidity facilities to the Rastra Bank in case of financial crisis. According to the bill, foreign payment institutions who want to do business in Nepal should have successfully operated their services in at least 10 countries.
Sub-section 3 has been added to Section 8 of the main Act and added the condition that a foreign institution wishing to do business in Nepal should have experience of doing business in at least 10 countries. It is claimed that this provision has been proposed with the objective of protecting the interests of consumers by allowing only internationally established and credible institutions to enter the Nepali market.
Similarly, the concept of a ‘regulatory sandbox’ has been introduced in Section 16A of the bill to secure new uses and inventions in the digital economy. According to this, any organization will have to undergo a certain period of testing under the supervision of the Rastra Bank before bringing a new type of payment service or device to the market. It is believed that this provision will identify the risks of new technology in advance and reduce the risk caused by it.
Similarly, a special provision has been made in Section 33 of the Main Act to avoid a possible liquidity crisis in the payment system. If there is a problem due to lack of liquidity in any settlement process, a provision has been proposed that the Rastra Bank can provide loans or other liquidity facilities at a fixed interest rate. This will prevent the large payment system from ‘collapse’.
The Bill empowers payment service providers to appoint agents directly. This will facilitate the expansion of digital payment networks in remote areas where banks have not reached.
Similarly, the qualification of the expert member of the National Payment Board has been made mandatory for a postgraduate degree and 5 years of experience. In Section 2, it has been proposed to remove the term ‘between the institution and the service recipient’ saying that it limits the payment process.
In particular, it has been proposed to make this provision in the Act to bring fintech companies under the ambit of regulation. The bill states that the scope of payments has been proposed to be broadened and legally more clear.
Sections 27 and 28 of the main Act have been amended to make it mandatory for the institutions to disclose the customer’s ‘e-money’ (money in the wallet). In addition, there is a more tight regulation to make the institution responsible in case of breach of confidentiality of the customer’s personal information.
