Nepal Moves to Strengthen Digital Payment Rules with New Legal Framework

The government is preparing to amend the legal framework governing Nepal’s payment and settlement system to address emerging challenges associated with digital payments and financial technology. Finance Minister and Acting Prime Minister Dr. Swarnim Wagle said in the House of Representatives that the proposed Payment and Settlement (First Amendment) Bill, 2083 is necessary to align the country’s payment regulations with technological developments and international practices. According to Wagle, the existing legal framework does not fully address the risks and challenges arising from new forms of digital payments and financial technologies, prompting the government to introduce the amendment. The proposed bill includes a provision for a regulatory sandbox, allowing Nepal Rastra Bank to authorize the testing of innovative financial technologies within a specified period and defined limits. The provision is aimed at facilitating controlled testing of new payment-related technologies before wider implementation. The bill also places emphasis on consumer data protection and risk management in payment systems. If the license of a payment service provider is revoked or not renewed, the provider would be required to return the e-money held in customers’ wallets within 30 days. Similarly, the proposed legislation seeks to make it mandatory for all payment instruments and payment service providers to connect to the Nepal Payment Switch. It also proposes facilitating the entry of foreign payment service providers into Nepal. For dispute resolution, the bill proposes forming a five-member committee chaired by a Deputy Governor of Nepal Rastra Bank. Minister Wagle said the bill would be further refined by incorporating suggestions received from lawmakers.